1) Range. During range periods, the EA would still generate constant losses, however, there will not be substantial growth of surviving position to offset these losses. Even more, most (if not all) of the newly established positions will die on break-even, both on buy and sell as D1 crossover flips up and down.
2) Reversal. When the main trend changes (or pulls back for substantial time), the established group would quickly lose both value and positions. The creation of a group in line with the new direction would reduce this effect in time, but Graeme's diversification is a way better approach to handle it, as you capture large profits in the process and reduce your exposure so that the reduction of value is controlled.
So you either need a more sophisticated analysis on the long TF (D1 in your case) and programming to handle ranges, keep track on current groups and "diversify" on specific moments (e.g. consolidation), or you need to manage this manually - stop the EA during ranges and diversify by hand.
Best regards,
Barbossa
