Do I use Expert Advisors on Forex?
Many novice traders are wondering whether it is necessary to use Expert Advisors in Forex trading. There’s a lot of opinion about this. High profitability of Forex trading attracts more and more new traders every day, who strive to fulfill all their dreams in the shortest possible time. Most of them sift out on their own after the first deposit drain. Smaller – he stays and begins to build his own career in trading, finding the only way to find the right one by trial and error.
Of course, only the basics of trading can be grasped in the shortest possible time. And novice players most often use additional tools to minimize trading risks. In particular, trading automation systems or Expert Advisors, as they are called, are used. And at this stage, the question of the expediency of using the “robot” is quite unambiguously solved. After all, reducing the risks allows at least to reduce the loss of a trader at the stage of obtaining the necessary experience of trading.
Expert Advisors or forex trading robots are special programs that allow to automate the trading process. The basis of such “assistant” is a successful trading system, which has already proved its viability in practice. The Expert Advisor can independently analyze the market condition, open and close positions in automatic or semi-automatic mode (with the participation of a person). There are special programs focused on working with a particular currency pair on the most popular Meta Trader 4 trading machine. But there are also universal variants that allow to work simultaneously with several investment instruments. These advisors are used to mitigate trading risk in general and in particular in certain areas by providing an opportunity to increase the percentage of transactions that are closed without losses or in profit.
Of course, Expert Advisors are not exactly a universal option. In any case, they are set up by the trader to solve the selected tasks, which allows you to bring the automatic trading closer to the real one – based on the application of “manual” methods of analysis. Also, such a robot can be configured to limit losses on transactions, set stop signals and the framework of price corridors. Depending on the settings, the manner of making deals will be chosen – it will be quite risky, but with the prospect of making a significant profit, or trading will be chosen “surely”, with minimal risk for the deposit. Actually, a correctly chosen Expert Advisor usually shows quite a high profitability – on average, from 10 to 100% of profit per month at relatively risk-free trading.
Classification of Forex Expert Advisors
Depending on the trading strategy used, Forex Expert Advisors can be divided by:
Scalping – the work of which is carried out on the basis of the principles of scalping and is focused on the short term transactions. In this case, during the day the machine can open and close hundreds of deals, forming the account balance based on the ratio of profitable to loss-making operations. Very often such trading does not bring the desired result because of the small size of the profitability – most often the price has time to grow by only a few points, and the size of the spread on transactions can almost completely overlap the profits obtained from them.
Ilan – based on the principles of the Martingale strategy, which implies a consistent increase in the number of open positions in one direction of the market. In order to get the maximum return on this type of strategy, it is important to calculate the lot size and the total amount of funds on deposit correctly.
Effective – those that are successfully used, tested for years and tested by hundreds and thousands of successful traders. Such systems are always distributed on a commercial basis, as they are the product of intellectual work of their author.
Paid and free Expert Advisors
Of course, in most cases the popular expression about free cheese and mousetrap is not far from the truth. Free Forex Expert Advisors are distributed free of charge, by brokers or by traders themselves. And no one can guarantee their performance. That is, you risk getting a “blind game” again, in fact – at random, instead of a trading strategy based on proven analytical methods.
Paid trade advisers are partly deprived of this shortcoming – they are distributed on a commercial basis, often for a lot of money. And the main thing is that such “robots” have a clear origin, a well-grounded strategic base and full support, which allows to receive regular updates in addition to the already purchased product.
Settings for working with trading robots
What do you need to know when starting to automate trading? There are a number of things to consider in the settings of your EA:
1) Currency pair selection – usually Expert Advisors are created narrowly for a particular financial instrument, so this parameter should be determined before buying a robotic helper.
2) Time Interval – set what is best for your strategy.
3) Trading Period/Temporal Factor – some types of Expert Advisors are designed to trade during certain hours, otherwise they may prove ineffective or even unprofitable.
4) Single lot size – As a rule, all Expert Advisors have a default size of 0.1, but it is better to check the size and set it manually if necessary.
5) Amount of risk – set manually. It is better to determine the optimal parameters for you in practice – by playing a game using the demo version of the trading account.
6) Limit levels – it is better to set take-profit and stop-loss indicators manually, without waiting for the deposit to be drained or the profitable moment to be lost for profit taking.
Advisors on Forex: pros and cons
- Expert Advisors, as a rule, are used by novice traders who do not have their own trading strategy, without which trading activities, alas, is not more profitable than a lottery or guesswork at random in the casino.
- Automation of the trading process allows you to relieve the player of the burden of worries associated with the need to conduct market analysis.
- It allows you not to spend hours at the monitor while monitoring the trading situation – to choose the best time to enter the market.
- Saves from the main thing – nervous tension, the most dangerous for inexperienced traders, who due to their excessive emotionality do more often than not act thoughtlessly.
But this is also the main trick of automatic Expert Advisors: they do not have the necessary flexibility and act according to their algorithm. The robot will not close the transaction before the price reaches the set stop-loss point, minimizing losses. It will not close the trade in profit, if the price stops in a step from the closing point. It will operate according to a clear scheme, which can bring a huge profit or merge the deposit in a matter of moments. And this risk cannot be disregarded in any way when making a decision to automate trading.
So is it necessary to use Expert Advisors in Forex trading?
Let’s say they can be used if you are sure that you understand the mechanisms of their work. And even better, if the trading robot will work on the basis of your own trading strategy, the effectiveness of which has been proven in practice and is beyond doubt. That’s how experienced traders work, giving only a part of their time to trade automation and using it as an auxiliary, not the main way of working.
You can read about another passive trading strategy in the article: “How to earn on a PAMM-account?