Many Forex traders prefer to automate their trading by using Expert Advisors (EAs). This presents many advantages compared to trading manually. Let’s look at what are Expert Advisors and what makes them so popular amongst traders.
What are Expert Advisors?
Expert Advisors are software programs that have been written for the MetaTrader 4 and MetaTrader 5 platforms. Expert Advisors can both advise you on how to trade and can automatically execute trades in your live account. Traders can choose to use a free or paid Expert Advisor or can choose to write their own.
Variety of Expert Advisors
When using an Expert Advisor you actually rely on the trading strategy that has been programmed in the software. The developer usually tests the Expert Advisor in a live or demo account and provides you with an estimate of the accuracy and the returns that can be expected if you use the EA. The profitability also depends on the risk levels that are set in the software and that in most cases are adjustable.
Traders can also choose to write their own Expert Advisor by using the MetaEditor. In this way, you can fine tune your strategy before executing it on the live market. LiteForex provides great EA execution, so you can be sure that your EAs will be executed at competitive market conditions.
There are many types of Expert Advisors, both free and paid, and each of them has been developed based on different trading rules. This means that you can be sure to find an EA that best fits your trading style and strategy. For example, some EAs are designed to make profits by trading only one currency pair or to trade in just one time frame, whereas others are more versatile. There may also be a difference in the way the trades are made – some Expert Advisors will close the trade only when profit is gained, while others will use a stop loss to minimize risk. Additionally, there is a group of EAs that try to predict the trend, and another group where the trend dictates the execution of the trades.
One of the biggest advantages of trading with Expert Advisors is that the trades will always be executed according to the initial plan. Unlike manual trading, where you can fall victim to emotions, automatic trading is 100% based on logic and patterns. No matter how many trades have already been executed, the EA will continue to perform the required actions again and again, without being disturbed by external factors. Additionally, you are no longer forced to stay in front of the computer for hours, as you can configure the software to do this on your behalf.
Suitable For Both Beginners And Experienced Traders
Automated trading is suitable for beginners, as it helps them to avoid potential mistakes that beginners usually make when trading. Moreover, it frees the novice trader from the routine of monitoring, placing and closing orders and allows them to concentrate on the latest market developments.
You Can Test an Expert Advisor Before Using It
Another great benefit of using EAs is that they can be applied to your Forex Demo account. This way you are able to test your Expert Advisor and optimize it by removing or customizing any settings that may potentially hurt your live trading account. Traders are also able to perform back testing of the Expert Advisors with the use of historical data. In just a few minutes you can see how effective your preferred strategy would have been if it had been used in the past.
Tips for Choosing an Expert Advisor
There are many Expert Advisors advertised on the internet. When searching for a profitable Expert Advisor you need to be careful. Some sellers offer paid EAs, which claim to have high returns and to be the best Forex Expert Advisors on the market, but in the end this turns out not to be true. Choose software with money-back guarantee or trial period and has customer support. When choosing an Expert Advisor, always take into consideration the profit that is expected, as well as the maximum drawdown level, as in this way you can calculate the expected returns and any eventual losses.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.