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Breakeven EA; Balance going up but equity is going down. HELP PLEASE!

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tj0o
92
tj0o  
Hi, I recently received the prototype of an EA that I wanted to have made, but I found out that in backtesting, the balance rose but the equity dropped. Why would that be? I'm pretty sure that I don't have two positions open at once and all the trades seem to be either in profit or closed at breakeven. If someone could explain or provide a solution to this problem then it would be much appreciated. Thank you for your time.
Keith Watford
Moderator
10637
Keith Watford  
tj0o:
Hi, I recently received the prototype of an EA that I wanted to have made, but I found out that in backtesting, the balance rose but the equity dropped. Why would that be? I'm pretty sure that I don't have two positions open at once and all the trades seem to be either in profit or closed at breakeven. If someone could explain or provide a solution to this problem then it would be much appreciated. Thank you for your time.


You must have open losing positions. It is the only way that equity can be lower than the balance.

Probably your EA does not use stop losses and holds onto losing positions relying on them eventually returning to profit. This is not a good strategy.

tj0o
92
tj0o  
Keith Watford:


You must have open losing positions. It is the only way that equity can be lower than the balance.

Probably your EA does not use stop losses and holds onto losing positions relying on them eventually returning to profit. This is not a good strategy.


Okay, thank you very much for your help.

Joel Simmons
3587
Joel Simmons  

Balance is never important. Equity is much more important. Any EA that losses equity is not a good EA, regardless if balance goes up or down. I prefer an EA where balance can go down, but equity goes up. That is much better.

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