Forex Expert Advisors, also known as Forex Robots or EA, is software that works as a partial or 100% Automated Forex Trading System and executes trades on the market 24/5 week. Most of the popular forex robots are offered via the MetaTrader 4 (MT4) platform.
An expert advisor for any platform works by coding pre-establish rules or strategies for making trade decisions. The rules programmed on an expert advisor (robot) are used to enter and exit trades on the platform. These robots are capable of making trade decisions in a way that humans can’t do. Robots can effectively scan the market, looking for trade opportunities with high accuracy within mini seconds.
If you have a profitable trading strategy that relies on candlestick patterns, indicators, support, and resistance levels, you can code it into a robot and sit back and allow the algorithm to do the work for you. Time-saving and reducing human errors are the main reasons why investors actually use expert advisors (ea’s). After all, the main reason traders lose because of emotions and the computer doesn’t have them (for now).
WHY FOREX TRADERS USE EXPERT ADVISORS?
Traders who use EA can be defined into three groups.
- The serious traders who are looking for ways to save time
- Gold diggers looking for dazzling easy profits
- New forex traders looking for professional strategies
The serious traders typically the ones use the full potential of automated trading. They follow realistic investment targets and are really checking out a system. On the other hand, gold diggers are only interested in the Holy Grail that will bring them wealth very quickly. They make the most of the mistakes that manual traders make.
ADVANTAGES OF EXPERT ADVISORS
- EA can Trades the Forex Market in multiple currency pairs at the same time.
- Trades the Forex Market 24/5.
- Forex robots don’t make order entry errors.
- Most robots come with money management features.
- A robot doesn’t get tired.
- Robots Eliminates Human Emotions such as fear and greed(this is the main reason I use Expert advisors).
- Can analyzes many charts simultaneously
- Forex robots are very easy to use (debatable)
- May work on a Demo Account for testing before used for real trading in a Live Account
- Can be back-tested (testing historic performance) on MT4 or other Forex Trading Platform.
RISKS OF USING A FOREX ROBOT
- Need monitoring
- Can trade during news events
- Changing market conditions
- Connection/VPS issues
I discovered the hard way that using trading robots needs lot monitoring. As an example:
- leaving an EA running just before a Brexit?
- Or the coronavirus which killed many profitable forex Robots.
Events like this can really hurt your account. So once your robot is up and running, make sure to log in daily(every time you can) and check the market situation. Especially news events can be having a considerable impact on your trading account. Understand that a FOREX expert advisor cannot detect whether the market conditions are changing. So, common sense is required to ensure the EA works as was predicted.