EA Description
This is something I always keep in mind when developing, not just this EA, but I believe that even if you fiddle around with a lot of strange indicators and improve the superficial BT performance, it will not work at all in real life . I aim to develop EAs that are based only on simple logic whose basis I can understand in my own head.
This EA constantly monitors the increase in volatility and thoroughly aims to falsely increase or decrease the price when a trend occurs.
In the market, various factors can sometimes cause temporary fluctuations that go against the original flow, but in most cases these are temporary and do not result in a trend reversal.
The reason why this false rise and fall when a trend occurs is effective is that when the price reverses, profits are realised on the positions that were falsely set up, and orders come in from algorithms and general participants to buy on dips and sell on rallies, which in turn involves the cut-loss of positions that have been fooled by the false rise and fall, strengthening the trend and returning to the original flow.
This EA will thoroughly target only this chart pattern.
Take profit and stop loss
Regarding taking profits, when the limit of momentum is reached or when profits continue to grow steadily, profits are secured using a trailing stop.
Unfortunately, if you enter a trade expecting it to be a false positive, but the trend turns around, you will need to stop your losses. Regarding stop losses, we have designed it so that you stop your losses at a point where the damage is minimized as much as possible by taking profits, but in the rare case where the trend turns around slowly, you will stop your losses when SL=100 pips is reached.
The data speaks for itself
This EA uses only three indicators and has not been optimized to make its performance look better, but over the 22 years from 2000 to 2022, it has the logic to continue to update its highest account balance while absorbing a 1 pip spread fee, leaving an expected value of +2.4 pips (PF=1.47, 3.4 pips per trade minus 1 pip spread)
However, there are some markets that this EA is not good at trading.
However, this does not mean that you can win in any market, and just like any other EA, there are markets that this EA is not good at.
I could have filtered it out, but doing so would not have been of any use in the future and would only have undermined the robustness of the logic, so I decided to accept defeat.
Please take a look at the profit and loss by year above. This year is a recovery, but we can see that 2019-2021 was a losing period (2019) or a period of low profitability.
What were the market prices like for these?
Those who have been trading FX since around this time will remember the yellow period, which was a time of historically low volatility, unstable direction, and fluctuating around 110 yen as if it was convenient for adults. During these times, the EA also had a high rate of misdirection and poor results, but due to the recent widening interest rate gap and instability in the global situation, it is highly likely that the trend toward a weaker yen and high volatility will continue for some time, and we believe that the market that this EA excels at will continue.
