[Episode 12] Five Things to Know to Build a Long-Lasting Relationship with Shōkinryū EA
This is the final chapter of the Ascending Golden Dragon serialization, which has been delivered in 11 installments.
In the previous 11 episodes, we have focused on information to “understand” Ascending Golden Dragon—design philosophy, logic, backtest results, compounding operations, etc. For the final installment, we shift perspective slightly and share five mental attitudes necessary tohave a long-term relationship with Ascending Golden Dragon.
EA is not a magical tool that guarantees victory just by buying. Even the same EA can yield very different results depending on how the operator uses it. I will share what I learned from my own failures in discretionary trading and transition to automated trading, for those just starting or already using it.
If you keep these five in mind, you should be able to ride waves in the market without losing the original power of Ascending Golden Dragon.
The most common mistake when starting with EA is judging results in just a few days to two weeks.
Ascending Golden Dragon is designed to make 22,189 entries over 11 years. It calculates about 5–6 entries per day, but the volatility can easily double or more depending on market conditions. “We didn’t profit this week” or “There was no movement today” are not unusual when viewed over multiple years.
The backtest average is 22.7% per year. Dividing this by 12 gives about 1.9% per month; by 4 weeks gives about 0.4% per week.In the short term, it’s normal to have weeks with no profit. Conversely, when you win substantially over several weeks, assuming “this pace will lead to 100% annual return” is dangerous.
- Within 1 week：Evaluation is not possible (almost random)
- 1 month：A trend starts to appear
- 3 months：Can judge consistency with backtests
- 6 months or more：A serious evaluation is possible
Ascending Golden Dragon is a ninpin-type EA. This design implies “buy more when price falls, lower the average price, and profit on rebounds.”
Because of this structure,drawdown will inevitably occur. An ninpin-type EA that never shows drawdown either enters far too few times or has an unrealistic design.
What matters is not the amount of drawdown, but its ratio and duration.
- Ratio：What percentage of the account balance. Under 10% indicates normal operation; over 20% warrants caution
- Time：How long you’ve held it. Several hours to several days is normal; one week or more requires caution
Develop a habit of judging whether drawdown is within expected ranges using these indicators, rather than being swayed by the drawdown amount itself.
When starting to use EA, everyone wants “more profit” or “operate more safely” and tends to tweak parameters.
However, Ascending Golden Dragon’s parameters are optimized from 11 years of backtests. Even moving the ATR coefficient for the ninpin interval a little can double or triple the maximum drawdown. A change intended to reduce risk may actually increase risk.
Only the following items are okay to modify:
- Lot size：Adjust according to your funds
- Magic number：If you want to run with other EAs
- Emergency stop loss amount： according to your tolerance
- RSI entry threshold
- ATR coefficient (ninpin interval)
- Take-profit width, maximum number of ninpin orders
- Time filter, spread limit
Ascending Golden Dragon’s recommended funds are 1,000,000 yen and 0.01 lots. This is the minimum level capable of withstanding the maximum drawdown of 11 years of backtesting.
However, there is no zero possibility of future market drawdown exceeding backtests. For long-term, stress-free operation,consider 1.5–2x the recommended funds (1.5–2 million yen)to provide mental safety.
- 500,000 yen・0.01 lot：Quite tight, dangerous in rapid changes
- 1,000,000 yen・0.01 lot：Recommended line, normal operation OK
- 1,500,000 yen・0.01 lot：Leeway, safe to leave unattended
- 2,000,000 yen・0.01 lot：Very conservative, long-term operation even with compounding off
Although compounding is often taught as the strongest approach, this is an ideal scenario. In real operation, leaving all profits in the account can result in past gains being wiped out during sudden market moves.
My personal policy is“withdraw 50–70% of profits at the end of each month”. The remainder continues to compound. This achieves:
Withdrawn funds are completely separated from bankruptcy risk. The remaining cash supports mental stability.
The remaining 30–50% continues to grow via compounding, ensuring long-term returns.
Profits in hand rather than just numbers on a statement, which helps sustain motivation.
The lure of compounding is undeniable, but I believe the balance between “aggressive compounding” and “withdrawal for safety” ultimately maximizes returns.
- ① Do not evaluate in the short term; view monthly or quarterly
- ② Drawdown is by design. Judge by ratio and time
- ③ Do not touch parameters (only adjust lot size, magic number, emergency stop allowed)
- ④ Treat recommended funds as the baseline. Running at 1.5–2x is safer
- ⑤ Withdraw 50–70% of profits at month-end, balancing push and guard
EA is not a magic that guarantees profits simply by buying; rather, it’s a partner that works long-term when you manage it correctly. If you keep these five in mind, Ascending Golden Dragon should reliably support your asset formation.
From the first installment, “the only reason it survived 11 years,” to the final piece, “five things for a long relationship,”
I have tried to convey the design philosophy, performance, and operating approach of Ascending Golden Dragon as honestly as possible.
If this serialization helps your EA selection and operation decisions, I would be glad.
For questions or consultations, please feel free to contact Asahina Lab (free community).
※This article is provided for information purposes and is not intended as investment solicitation. The results shown are past performance and do not guarantee future profits. FX/CFD trading involves risk. Please make investment decisions at your own responsibility.
