What is an “Expert Advisor”, and how to select it

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Trade with expert advisor is not recommended for beginners, although it appears that these add-ins can facilitate trading in the foreign exchange market. Not at all. Expert Advisor is a weapon that can only benefit in the right hands, while the lack of understanding of the algorithms is only able to harm.

Expert Advisor — it is a program add-in that is installed in the terminal and is a trading algorithm written on the basis of technical analysis. In other words, to find the entry point, the trader must use a series of technical tools. Manual control of charts can cause a trader’s inattention or hesitation and he could miss the convenient entry or exit. Automatic trading robots eliminate this problem.

The principle of operation of these programs is designed to identify turning points in the market, which is convenient to open or close a position. The degree of risk in most advisers are configured so that three unprofitable trades have a profitable one, overlapping the previous loss. The trader only needs proper tuning and defining the nature of his trading strategy (for that, in fact, the Advisor is selected).

The advantages of expert advisors:

  • ability to open and close trades without trader’s participation. Trade with expert advisor saves time, but requires practice on a demo version on individually for each instrument;
  • errors associated with the pressure that is due to the emotional state of the trader are excluded;
  • there is the possibility of testing multiple trading technologies.

The biggest mistake of novice traders is the attitude to trade with the trading Advisor, as to something simple and free. You cannot just take and install the free program, thinking that it will make a profit for the trader. First, the professional traders themselves understand the code and create their add-ins (for example, MetaTrader 4 allows you to do this). Secondly, the Expert Advisor is only the automation of technical analysis tools! Not understanding the principle of operation of indicators, it is impossible to work successfully even with an advisor!

Disadvantages of expert advisors:

  • as with any robot, the program does not take into account the fundamental factors or emotional outbursts on the market, inexplicable from the point of view of logic. Because trade with an EA is recommended on calm markets. At the end of the session and on the news factors of the trade often is not conducted (or the relevant programs designed only for trading in a volatile market are applied);
  • no insurance against failure of the EA due to force majeure factors or the imperfections of the program;
  • the one-sidedness of the Advisor. If a trader with knowledge can respond to any market situation by applying additional indicators, the expert Advisor can give false signals (although in many cases advisers are more effective than any person).

The most correct use of an Expert Advisor is a combined version. The program is used as definition of signals, but ultimately the decision to deal is taken by the trader. For beginners trade with trading Expert Advisor can help in demo account to understand the individual indicators. If you do not have time for the analysis of signals, misinterpret their data, use the tips of advisers: watch how they react to the market and draw your own conclusions.

Important: specify the terms of trade with the broker! Some companies do not support the ability of automated trading (Expert Advisor) or allow it only under condition of  substantial replenishment of the account!

expert adviser for forex

Trade with Expert Advisor: how to choose a plan

The trading advisors can be free and paid. Really good programs cost a lot of money (as well as any legal software), but there is a risk to buy a “pig in a poke.” Conclusion: chase the expensive programs without trying free ones, is not worth it.

Principles of selection of the EA:

  • determine the stability of the robot on different market situations. Testing on demo version might take a few days;
  • monitoring of real accounts. If the seller is in the monitoring of the advisor doe not provide the history on a real account, the Expert Advisor should not be bought. However, these data successfully counterfeited, but on the Internet there are special portals that allow monitoring data to determine the reality of the accounts;
  • Backtest. The scale of return should be smooth with 99% modelling quality. Alas, this test is often counterfeited;
  • reviews. The more positive reviews, the more likely that they’re fake. Any opinion reflects both sides of the Advisor, and the perfect programs do not exist;
  • payback. If the value of the adviser in 2000 dollars its yield is about 10%, when you Deposit 10 thousand dollars it will be paid back in 2 months.

It is logical that brokers of B-Book type are not particularly pleased with the trading advisors and can incorporate into their trading platform plug-ins that hinder trade with the trading advisors. So be very careful! And do not chase the easy prey — the Forex requires perseverance, and easy money is not here. Trade with Expert Advisors – is only another assistant, as the signals from the broker or technical analysis tools. No more.

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