Create a portfolio with EA to stabilize profit

In Forex trading, there is a style of trading using automatic trading, and the tool that helps dealing in automatic trading is called EA. EA is developed and published by programs familiar with Forex and engineers, and is provided for free.

By looking for the EA you want to use and setting it on the MT4 platform, transactions are carried out according to the program automatically built afterwards. By constructing EA in the portfolio, you can increase the opportunity to profit while diversifying risk.

Let's first understand the three market prices

Let's first understand the three market prices

In organizing EA into a portfolio, what is needed is grasping the trend rate. The rising trend is a state in which prices are rising over the long term, while on the contrary the price is declining over the long term as a downward trend. What is common to each trend market as you look at the minute and hour unit is the repeating up and down . In the Day trade and swing trade in particular, the wider the interval, the higher the need to suppress the trend rather than scalping.

The price range is always going up and down. The trend that is neither rising or descending trend is called a range market/rate. EA has types that have strengths in rising and falling trends and types that have strengths in range markets. When incorporating it into the portfolio, it is possible to combine EA suitable for each range price to lead to stable earnings.

Risk of intensively investing in one EA

Building multiple EAs in the portfolio is fundamental, but it does not take much labor to concentrate on one EA. Still, the act of not doing a concentrated investment in one EA is because it is accompanied by risk.

It is fundamental to trade Forex while watching the rate of each country's currency pair. Since the economic power of each country is appearing in the rate, the value of the currency is related to the economic situation and the reliability of the country as it further digs down. When terrorism, natural disasters, and large enterprises go bankrupt, the value of the currency will decline considerably. Some elements can be predicted beforehand and others are impossible to predict. Considering the risk that the loss will increase if you rely on one EA and place an order, it makes sense to distribute the risk using multiple EAs.

Correlation coefficient necessary to stabilize revenue

Correlation coefficient necessary to stabilize revenue

It is the correlation coefficient that we need to know in order to stabilize earnings by constructing a portfolio with EA. In trading currency pairs which is the basis of Forex, for example when it is a combination of US dollar and yen, each currency is like a tug of war when rate fluctuation occurs. However, as you look closely, the value of the currency of other countries is also indirectly involved and has a great influence on the rate change. By choosing a strong currency and a weak currency at that time according to the correlation coefficient, we can obtain stable earnings by selecting suitable EA in the portfolio.

Regarding the selection of strong currencies and weak currencies, we will bounce out of six currency pairs, mainly US dollar, yen, euro, pound, Australian dollar and New Zealand dollar. Each currency pair is checked, it is a strong currency in the upward trend, and a weak currency in the downward trend.

Points to note when constructing a different type of EA

Regarding how to operate EA when using multiple EAs, you need to choose a different type. A portfolio is a method with strength in risk diversification, by offsetting plus and minus by doing market follower and contrarian EA, we gradually secure profits out of them.

Even if plus comes out in Forex investment which is concentrated in one place, we cannot keep winning. It is common for winning traders to repeat winning and losing. Losing traders feel resistant to losing. Since the portfolio is a trading method after considering the premise that it will lose, it focuses on reducing losses when losing rather than winning.

One thing to keep in mind is that there are cases where it is costly to incorporate EA. Since it is fundamental to organize multiple EAs in the portfolio, think about the balance between the cost of EA and the profit obtained by trading, so let's take a moment to get stable earnings.

Timing of back test of EA and review of EA

Be sure to perform back tests when building EA in the portfolio. It is possible to pick up excellent EA by back testing based on the past chart and seeing the result. However, at that time it is difficult to win continuously even with an excellent EA, and regular review of EA is also necessary.

Even though you think that the performance of EA has declined, it is necessary to be careful to change immediately. Although it may be possible to consider replacing if it looks like the overall total is negative, but by replacing it immediately, the number of new EA that can be used is limited. Forex which is done by organizing EA in the portfolio is automatic trading, but you must also select the optimum EA and check the performance.

In GEMFOREX, you can add EA that you want to use for trading to My List and form a portfolio in it. In addition, you can also check the performance, so you can form a portfolio each time while checking whether stable revenue can be obtained. Let's try to stabilize profit by combining numerous EAs.