Pairing Optimized Direct and Reverse EAs to Offset Drawdowns

Summary

The article proposes running two versions of an automated strategy at once: one trades its original signals, while the other trades in the opposite direction. Each version is optimized separately, including its stop-loss settings, and the author argues that their differing trade timing and price levels can let gains in one cover losses in the other. The intended benefit is lower combined drawdown, with higher margin use as a cost; the author suggests adding position sizing after pairing the systems.

An example uses GBPUSD on H1 over a historical period from January 2005 to May 2007. The article reports separate results for the direct and reverse systems, then gives net profit and drawdown figures after enabling proportional lot sizing. It describes charts in which the two equity curves often offset one another. These are historical tests of one EA and period, not evidence that the approach generalizes. The text also acknowledges that both systems can lose together, and offers the pairing concept—not the particular perceptron EA—as its main idea.

Key ideas

• The method runs a strategy and an independently optimized version that takes opposite trades at the same time.
• The author expects differences in parameters and trade timing to make the two equity curves offset each other.
• The stated objective is reducing combined drawdown, while accepting higher margin requirements.
• The article illustrates the idea with historical GBPUSD H1 tests and proportional position sizing.
• Both systems can lose at once, and the reported backtest does not establish performance beyond its tested setup.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.