Balanced Portfolio V1

How it works

Balanced Portfolio V1 runs a consistent H4 trend-following logic across four currency pairs simultaneously. Each pair is treated independently with its own entry signals, stops, and position management — but a set of portfolio-level rules governs how the four interact.

The entry logic is an ADX-filtered EMA trend system: the EA only enters when ADX exceeds 20 (confirming a trend is in play) and price is in the direction of the 21-period EMA trend. Stops are set at 2.0 x ATR below entry with a trailing mechanism.

The portfolio-level controls are what differentiate this EA:

• Correlation cap: two open positions with >0.70 rolling correlation are treated as the same trade. EUR/USD and GBP/USD frequently correlate above 0.70 during risk-on/off events — when they do, only the stronger signal pair is entered.
• Max open pairs: at most 3 of 4 pairs can be open simultaneously, preventing over-concentration when all signals fire at once.
• Equity drawdown pause: if total equity drawdown from the high watermark exceeds 8%, all new entries pause until recovery, regardless of trend signals.

Why multi-pair diversification reduces drawdown disproportionately

Adding a second uncorrelated pair to a single-pair trend EA reduces drawdown by more than it reduces return. This is the diversification ratio at work: if EUR/USD has a 10% max drawdown and USD/JPY has an independent 10% drawdown, running both simultaneously (with correlation cap) typically produces a combined drawdown of approximately 7–8%, not 10%. The compounding effect applies in reverse to losses.

The four pairs in this EA were selected for low inter-correlation in normal market conditions while maintaining high liquidity and tight spreads.

Risk profile

• Max drawdown -6.1%, the lowest of the five EAs in this catalogue. The diversification and correlation cap are the primary reason.
• Sharpe ratio 2.04 — the highest in the catalogue. Multi-pair diversification improves risk-adjusted return even though raw return is not the highest.
• Recovery 21 days average — the portfolio structure means a drawdown in one pair is typically offset by gains in others.

Recommended deployment

• $5,000 minimum to sustain positions across up to 3 pairs simultaneously at 0.01 lot each. Reducing the lot size to accommodate a smaller account is supported but reduces absolute return.
• Risk-weighted AllocationMode is recommended for accounts above $10,000 — it adjusts lot size for each pair relative to its current volatility, producing more consistent per-pip risk.
• All three listed brokers (XM, HFM, Exness) are verified. Exness offers the lowest spread but has fewer account type options than XM for non-professional clients.
• VPS required — four-pair H4 monitoring with correlation calculations requires reliable uptime.

What the EA does NOT do

• It does not exceed the MaxOpenPairs limit regardless of signal strength.
• It does not open correlated positions when the correlation cap is active — this is by design, not a bug, even if the second pair appears to be trending strongly.
• It does not resume trading after an equity drawdown pause until the recovery threshold is met, even if trend signals are firing.
• It does not use martingale or averaging in any of the four pairs.