Have you experienced times when your EA was profitable in trending market and suddenly all the profit was taken back in a series of losses? What is the reason and HOW TO AVOID IT? Let me explain the basic principle how most Forex systems work.
They are tuned up to work in a specific market condition. They often make money in a trending market, but loose money in a choppy market. It is not a problem as long as the market is trending and the system is making more money than it loses. Such a system can be profitable for several months and you would be happy with it. BUT… PREPARE FOR THE WORST… Market change over time.
A well designed system starts with trend analysis to stay away from potentially losing trades. There are two problems of how a Forex system recognizes the trend.