An expert advisor (EA) is software that guides you when to make trades in the world of foreign exchange (forex) trading. You can also programme the software to perform and execute the trades based on your own criteria.
Expert advisorsare most often used with the MetaTrader 4 or 5 forex trading platforms. Depending on your customised trading parameters, you can use an existing EA or create your own. These EAs are written in the “MetaQuotes” programming language (MQL).
Let’s explore more about the EAs in this article.
What does the meaning of “expert advisor” depicts in forex trading? Before we answer the question, “What is an EA in forex trading?” it is necessary first to understand certain important aspects of the forex market.
The forex market is available for trading 24 hours a day, Monday through Friday. Being constantly active around the clock is impossible for humans; nevertheless, a machine may trade for days without ever needing to take a break. This is one of the most vital areas where forex EAs come to rescue the traders.
A forex expert advisor is an automated system that monitors the forex markets and provides signals when trading opportunities are identified.
We do not recommend any specific forex expert advisors due to their unpredictability; however, some professional traders find them useful.
EAs may be programmed to automatically generate trading signals and notify you of trading opportunities. EAs may be used on a variety of forex trading platforms. Some of them, such as MetaTrader 4 (MT4) and MetaTrader 5, allow traders to fully customise their trading systems before using them on a personal account (MT5).
Like a forex expert advisor, a forex robot is another automated trading system. It is a programme that works to identify market patterns and generate trading signals.
Unlike a forex expert advisor, a forex robot trades on the trader’s behalf automatically. In contrast, an expert advisor will always require a trader to authorise individual trades manually.
Every forex expert advisor is based on predefined rules. However, the rules that EAs use to trade might vary. As with any automated software, they reduce the chance of making emotional and irrational trading decisions, which is a common problem for inexperienced forex traders. A forex expert advisor adheres to a strict set of rules and is free of human intervention.
Forex EAs are readily available on the internet and can be quickly installed into your trading platform without any advanced technical knowledge.
Before we go into the functions of forex EAs, let’s go through the four types of forex expert advisors you could come across:
There are several MT4 and MT5 Expert advisors available on the internet. Some have been designed specifically for trading news events, and others are designed to be active 24 hours a day, seven days a week. Experienced forex traders that have developed their own manual trading FX systems sometimes engage MQL4 programmers to automate their systems, resulting in their own proprietary EA.
All Expert advisors have the same purpose: to fully automate the forex trading process besides making a profit. Expert advisors use technical indicators to assess market conditions and then make trading decisions. An Expert Advisor must first be added to a chart on the MT4 platform before it can be used.
An Expert Advisor can consider thousands of factors and elements to decide the next action. This ability to examine such a wide variety of price-influencing factors, combined with the discipline of an emotionless automated trading system, leads to a very beneficial and effective combination.
The answer is yes. On the MetaTrader client terminal, you can use multiple forex EAs. It should be noted that not all Expert advisors collaborate on the same terminal. This is because they will try to manage each other’s open trades. Programmers usually get around this by requesting specific numbers in the market entry section of the source code.
However, there are certain platform constraints. For example, one Expert Advisor in MetaTrader can only talk with one trading server at a time. If multiple forex expert advisors are active on the same terminal and attempt to interact with the trading server, you will soon get ‘trade context busy’ errors in the logs. This happens when you have too many forex expert advisors on a single client terminal.
The finest forex expert advisors can be programmed to work in a variety of ways (for example, by using a variety of technical indicators such as the moving average indicator or the MACD indicator) or by looking for necessary trends and breakouts.
The forex expert advisor may analyse the market as well as the behaviour of individual financial instruments using these various indicators and generate a signal regarding trading opportunities.
As previously said, EAs are similar to forex robots, another sort of automated trading software.
However, the terms are frequently used interchangeably, which implies that many so-called forex EAs may do much more than simply generate signals.
Some expert advisors for forex are designed to take complete control of your account. The idea is that it will examine your current account balance before determining how much of it may be put at risk. The general rule of thumb is to risk no more than 1 to 2% of your account balance.
Furthermore, it may review the trades and decide if a trailing stop, take-profit, or stop-loss should be used. Forex expert advisors keep into account the current market conditions while having the necessary information (technicals & fundamentals). As a result, you will be notified when to open a certain position.
If you want to create and use your own forex expert advisor, here are some points on how to do it without using a forex EA generator (this is a tool where you enter the parameters of your preferred trades, and the tool generates the EA programme for you).
The first tip is to be sceptical of the reliability of backtesting results. Great backtesting results may appear to be proof that your system is ready to thrive; however, this is not the case.
These results are dependent on the quality of the data used in the backtest, meaning that poor data might lead to unreliable results. The default data in MT4 and MT5 can only reach a modelling quality of up to 90%. While this appears to be a good thing, it can lead to considerable differences in backtesting and live experience, particularly on smaller time frames.
Fortunately, there are free historical data sources available, as well as instructions on how to prepare the necessary data for MetaTrader.
Getting reliable data is the first step in adjusting a forex expert advisor to trade on a live account. The next step is to understand your execution speedfully.
The trading session length for MT4 and MT5 is 30 seconds. If you are using a forex EA, your session will automatically time out if there is no trading activity for more than the period mentioned above. This requires that the IP address be automatically re-authenticated using a password and login.
With some brokers, this can take some time, possibly up to two seconds. Even while it may appear to be an insignificant amount of time, at times of high volatility, delays of this size can substantially impact the results of your trades.
If you’ve ever spent any time writing a complex Expert Advisor in MetaTrader, you’re well aware of how difficult it is to debug the code. Because MetaQuotes’ policy indicates that they cater to the needs of brokers rather than traders, a debugger is not mentioned in the list of available tools.
Fortunately, there are several things you can do to make your life easier. One method is to insert print functions into your code directly, but this may be hard to manage, particularly if you have thousands of lines and don’t know where the problem is. To view a methodically formatted log, you may also download Microsoft DebugView.
Make sure to test your MetaTrader connection. To operate your Expert Advisor, you must have your platform turned on and directly connected to your broker. Nothing is more disappointing than thinking you have a forex expert advisor only to find that it has been disconnected and is unable to reconnect.
While MT4 and MT5 are intended to automatically reconnect to the server without issue, this may not always occur.
If you have multiple MetaTrader accounts, incorrect credentials may be used during reconnection.
The best resolution is to delete any unapplied accounts from the Navigator window in MT4/MT5. Although this is not often a major issue, it may be extremely frustrating if you keep getting disconnected and your forex expert advisor is not always up and running.
Remember that the expert advisor software must be integrated with your trading account.
To make this process go successfully, you’ll need a trading platform that works with both your broker and the EA you want to use. As I previously mentioned, there are several forex expert advisors for MT4 and MT5 available on the internet.
Finally, while searching for a broker, attempt to find one who is:
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Choosing a broker is extremely important in every aspect of trading. Trading with the wrong or even an “overnight” broker that is trying to scam you is a harsh reality. Choose a broker that aligns with your needs and that you can trust with your hard-earned money!
It is often said that trading is simple but not easy. The reason for this is that the way our brains are wired is in direct conflict with achieving optimal market results. Most of the time, the choices that feel the most comfortable in the market are the ones that get us into trouble. On the other hand, those decisions that feel gut-wrenching tend to produce the best, most profitable trading opportunities.
Maintaining discipline is especially difficult for discretionary traders who are constantly influenced by their emotions as they interact with market forces. Traders that have taken the time and effort to create a rule-based trading methodology that can be converted into a Metatrader 4 expert advisor system, on the other hand, can preserve greater discipline in their trading.
This inherent advantage stems from placing your complete trust in the trading system, which will execute your programmed commands without fail or hesitation. This form of robotic interaction is the pinnacle of market discipline. Computerised expert advisor trading systems excel in this area.
Whether you consider yourself a scalper, a day trader, a swing trader, or a position trader, it is critical that you respond quickly to trade setups and execute your trades in the most efficient manner possible. As your trading window shortens, this becomes increasingly important. For example, a few pips difference in profit potential might make or break a trade for a scalper vs a long-term position trader.
Short-term traders must thus make every effort to reduce latency and slippage. A well-designed forex expert advisor may identify possible setups considerably faster than a human can with the naked eye.
Furthermore, the adoption of a forex trading robot will considerably improve execution time. EAs respond to trade situations faster than a human trader could ever hope. This advantage is amplified if you trade with an ECN forex broker whose infrastructure is designed for optimal execution.
There are only so many hours in a day that a discretionary trader can devote to the market. Typically, they will spend a specific life of time meeting their work and personal schedules. The number of opportunities available to discretionary traders may be reduced as a result. Remember that the forex market is open 24 hours a day, and opportunities might come anytime.
Using a forex expert advisor can maximise efficiency and reduce the time needed to watch the markets. Once the development time for building an expert advisor is complete, your rule-based trading system’s continuous monitoring may be relatively small.
There must be a balance between the time you devote to market activity and other work and family obligations. When you have this balance, you can trade with clarity and attention while still taking care of other duties in your life.
A reliable expert advisor may assist you in trading the markets while working full-time. This is also possible if you are a discretionary trader, but it becomes much more difficult if you are more focused on short-term trading time frames. Generally, the shorter your trading timeframe, the longer you will need to be glued to your computer screen during the trading session.
This is not an issue for traders of short-term systems because EAs can manage any actual number of trades during the trading day without additional effort or time. This provides additional opportunities for an automated EA trader to engage in other hobbies and interests.
Whether we recognise it or not, emotions may play a significant role in our financial market decision-making. Some traders believe that while trading the markets, they have complete control over their emotions and will act in a way that is compatible with capital preservation and growth.
Fear and greed have enormous market effects and weigh heavily on our decision-making process. So we must do everything we can to attempt to control those unfavoured emotions. One method to do this is using an expert advisor trading system in the market. EAs carry out their duties in the market with no emotional barriers.
They are simply programmed to follow and execute a preset set of rules, which they do. As a result, using expert advisors has a significant advantage in preventing us from relying too heavily on our emotions rather than objectively focusing on the trade situation.
Every trader should become familiar with their trading strategy’s overall metrics. This includes win percentage, average win to average loss, maximum drawdown, number of consecutive wins, number of consecutive losses, trade expectancy, profit factor, and other performance metrics. Only after you have a good sense of these essential metrics will you be able to stick to your trading strategy consistently.
A backtest is one of the best ways to arrive at these metrics. Backtesting can be time-consuming for traders who trade manually. Backtesting, on the other hand, is typically a breeze for the system trader. Metatrader features a robust backtesting engine that can quickly backtest your trade strategy.
You are only limited by the amount of historical data available to you for running the backtest. Furthermore, once the backtest has been completed, you may run various optimization tests to improve the expert advisor’s performance.
Unless you build your own expert advisor in MT4 from the start, you will find that most forex expert advisors hide the system’s trade logic. This is commonly known as a black box trading system. A major problem with trading black box trading systems is that when the system has a drawdown, it becomes tough to stick with that.
Obviously, whether you are a discretionary or systems trader, and regardless of whether you are aware of the trading rules, you might fall victim to this tendency. It is, however, considerably more pronounced when employing a black box EA system.
This is because when you are blind to the system’s rules, you begin to question the system’s integrity far more than if you are intimately familiar with the rules that go into the methodology.
This is one of the reasons why profitable, time-tested forex EAs frequently lose money for traders. This is to suggest that a trader ultimately becomes uneasy with the uncertainty inherent in a black box system, making it impossible to follow during a losing streak.
Data is an integral aspect of the trading business. Traders also use historical data to backtest their trading methodologies. However, this can be a double-edged sword at times. That is, if you abuse a data set long enough, you will ultimately get any results you desire.
As a result, if you’re developing your own expert advisor, it’s important to take the necessary steps to ensure over-optimising the system. Because if you’re not careful, you’ll create up a system that looks great on paper but will very likely fail while trading in real-time in the future. So keep it in mind if you want to create your own expert advisor.
Individuals seeking to buy an expert advisor from a system developer or expert advisor programming services company must do adequate due diligence to ensure that the performance results have not excessively curve fit.
This might be difficult at times prior to purchasing any expert advisor from the system vendor, but every effort should be made in this regard. One practical recommendation is to test the EA strategy in demo mode before committing real capital to it in the market.
An expert advisor is typically activated by connecting it to a chart inside the Metatrader platform. The EA will then execute trading orders on that particular currency pair.
Though some EAs can handle multiple currency pairings, the majority are designed to trade just one currency pair at a time. This might restrict your exposure to market opportunities. You will forego some of the diversity you may gain by employing a multi-instrument trading strategy.
Trading just one instrument might raise your overall risk. For example, if you were trading only one currency pair with a total position size of five mini lots assigned to the trade. An unfavourable price move caused by unexpected news may hurt you significantly more than if you had the same total position size open but spread over many currency pairs.
When using a computer-based systematic method to trade the markets, you must be aware of various technical faults that may occur both within the system and from the linked hardware components.Forex trading tips - I implement what I teach! — 2023
There may be times when you experience technical challenges such as computer crashes, software upgrades, power outages, connection issues, and other associated issues that directly impact the expert advisor’s performance.
As a result, expert advisors must be examined regularly to ensure that there are no technical flaws in it or your infrastructure configuration. As a result, you’ll want to keep an eye on your expert advisor’s internal operations to ensure that orders are routed appropriately, and that signals are created exactly as you specified.
If you find any anomalies connected to this, you must move quickly to restore or change the expert advisor code.
It works best when an expert advisor is deployed from a dedicated server. EAs are typically run on virtual private servers, or VPS, for optimal performance. This can reduce some technical challenges related to trading an expert advisor.
The advantage of a VPS is the ability to house and deploy your expert advisor from a reliable network, which may also provide lower latency for faster execution. Furthermore, because a VPS can be accessed from any location with an Internet connection, it offers high flexibility for traders who are typically on the go.
All of this, though, comes at a cost. As a result, consumers interested in forex trading with expert advisors must consider this additional cost. While the cost of virtual private servers is decreasing, the additional cost may only make sense for individuals who have a reasonable capital basis in their trading account.
Those that successfully trade the market have achieved something highly sought after in the investment world. This is the skill of financial trading. This highly sought-after skill can help you build a fortune over time. Such a skill can only be acquired after many years of sitting in front of a computer screen watching price action.
You are not building your own trading skills by relying on an expert advisor to trade the markets. Most expert advisors are only useful for a limited time, and when market dynamics change, that particular expert advisor may become obsolete.
As a result, relying too heavily on an expert advisor to trade on your behalf may lead to disappointment down the road. If there existed a piece of code that could extract profits from the market under every market regime, the developer would most likely not offer it to you.
You will have come a long way in your trading career when you learn how the markets work and the most effective trading strategies for various market conditions. Remember that there is no holy grail trading system in the markets, and any search for the best forex EA would be fruitless.
If you feel the need for something custom you have the option of getting your own EA designed/coded. A lot of traders take this route. Does it lead to a successful outcome? Most of the time it is nothing but disappointment and failure.
Traders often get stuck in the mindset that there must be a way to beat the markets in some shape or form by utilising expert advisors. They neglect the basics and fully believe there is an easy way out. Sadly this is not the reality.
You will be much better off reading a well-put-together beginner guide or trading tips from actual experienced traders.
Since the beginning of the modern era of forex, trading traders have tried to find an EA that shows long-term profitability. Have you legitimately come across such?
Lastly, ask yourself the following. If, and that is a big if, someone developed and managed to find the holly grail, why would they make it public or even sell it? I sure wouldn’t!
You may benefit from the following advantages of employing automated software, such as a forex expert advisor: it can trade while you sleep, is not affected by emotions, and can run backtests quickly.
However, it is hard to ascertain whether an EA can help you in achieving consistent profits. If you’re looking for a free forex EA that works online, read plenty of reviews from other traders to find the best one.
If you prefer to create your own forex expert advisor, make sure to follow the advice we provide to avoid unpleasant situations.
Expert advisors(EAs) are programmes that run on the MetaTrader 4 (MT4) platform that employ algorithms to monitor and trade financial markets. They find opportunities based on the parameters you set, then notify you or open a position automatically.