Why Buying and selling a Portfolio of EAs Is So Highly effective
Many merchants focus all their capital on one single EA.
If it performs effectively in backtests and has labored for years, it feels “secure”.
However in skilled buying and selling, this is among the largest hidden dangers you may take.
Essentially the most sturdy method to commerce algorithmically is to not discover one good technique —
it’s to mix a number of uncorrelated methods right into a portfolio.
This text explains why, utilizing real-world logic and easy examples.
1️⃣ The Downside With Buying and selling Solely One Technique
Even the very best EA goes by way of dangerous intervals.
A technique can:
…and nonetheless cease working sooner or later.
Markets evolve:
You can not predict when this occurs.
When you commerce just one EA and it fails:
Your account stops rising
You might sit in drawdown for months
You might not even understand it has stopped working till it’s too late
With one technique, you don’t have any backup.
2️⃣ What a Single Technique Fairness Curve Seems to be Like
A single EA usually reveals:
Larger volatility
Deeper drawdowns
Lengthy stagnation intervals
Even worthwhile methods can really feel psychologically exhausting to commerce as a result of every part will depend on one logic.
3️⃣ The Energy of Combining A number of EAs
Once you mix a number of methods, one thing highly effective occurs:
This solely works if the methods usually are not extremely correlated.
Meaning:
Completely different market behaviors
Completely different entry logic
Completely different time traits
Ideally totally different devices or periods
Mixed portfolio instance:
This portfolio combines Prop Agency Gold EA, Market Anomalies EA, RangeBreakout EA (traded on BTCUSD, US30, DE40), and Gold Atlas EA collectively in a single diversified buying and selling portfolio.
As a substitute of 1 fairness curve doing all of the work, a number of curves help one another.
4️⃣ Correlation Issues (A LOT)
That is crucial.
When you run:
5 breakout methods
On the identical image
On comparable time logic
Then your portfolio shouldn’t be diversified.
If the market enters a nasty setting:
True portfolio energy comes from low correlation, not simply “extra EAs”.
Examples of diversification:
- Breakout + mean-reverting methods
- Development-following + short-term methods
- Time-based exits + trailing stop-loss exits
7️⃣ Portfolio = Safety Towards Technique Failure
This can be a very powerful level.
Irrespective of how good an EA is:
When you run:
1 technique → failure = 0 revenue
5 methods → 1 fails, 4 proceed
That provides you:
A portfolio buys you time, and time is survival in buying and selling.
8️⃣ Ultimate Ideas
You don’t want:
A whole bunch of EAs
Advanced hedge logic
Over-optimization
You want:
This strategy offers you:
The aim shouldn’t be one good EA.
The aim is a system that survives the long run.
