What is EA?
Expert advisors can work to many types of trading strategy, to match your personal style. Many developers have created EAs that either contain different algorithms in one solution or multiple products that work on single strategies.
When you start using an EA it will depend on the developer as to how much input you need to have before launching. Some EAs are ready to go straight away – just push start. Others will need some guidance, with specific parameters chosen by the user beforehand.
Reasons to Use an EA
Experienced traders use expert advisors – but so can inexperienced beginners. There are many reasons that forex traders look to EAs to help them in their trading:
1. Accessibility
EAs are easy to import and use – and if you are a coding whiz, you can make one to your exact specification.
Some EAs offer flexible ways to change the code, and therefore the trading parameters and strategy, without knowing MQL – with a few simple clicks, you can change the stop-loss limit, the number of trades you want to make or the acceptable slippage rate.
Even if you are not technically able to change the parameters, you can easily access the basic algorithm and make use of it, even without specialised knowledge of trading or coding.
2. Time
As mentioned before, it takes a long time to gain the knowledge and experience needed to become a profitable forex trader. Using an EA might not make you the most knowledgeable trader, but it will monitor the market for you in a way that most humans would struggle to do.
Because the automated expert advisor can run all day, every day, you will have more time to work, spend time with your family or, indeed, sleep without missing any opportunities. Timesaving is a popular feature of EAs and a big selling point.
3. Machine
Machine learning makes your EA a constantly updating piece of software. Most EAs use AI technology that learns as it trades and, with different neural networks available, it can learn much quicker than humans.
The other benefit to an EA being a machine is that the algorithm sees the trade in black and white. It takes the emotion out of the trade by reducing it to a simple yes/no decision, avoiding human recklessness or fear.
4. Flexibility
While forex expert advisors are usually used on forex markets, they are flexible enough to run on indices, cryptocurrencies or commodities too. The EA can be adjusted to react to price movement, economic announcements, current available balance and technical indicators – all using highly sophisticated algorithms.
Things to Consider Before Using an EA
When it comes to finding the right EA for you, there are some downsides to consider – you will be trusting your capital to it, after all.
They are not always experts – If you are looking at a product that claims to be better than a human trader, or one that promises a million-pound profit, then it is probably too good to be true. Treat finding the EA for you like you would any investment – look for unbiased reviews, check how they perform against other EAs and in a live market, and look for advice from established traders. Some EAs have been known to be scams, so you will need to do your due diligence before investing.
They are not human – While the lack of humanity in the software reduces the emotional factor, having little human interaction can mean that the software can not react quickly to changing circumstances and can not think creatively. This is a problem that can sometimes be dealt with through changing the code and the parameters of the software, but in the meantime, it can lead to failed trades.
Is your EA always connected? – Unfortunately, the EA can only run on the device it is downloaded to. This means that unless that device is constantly on and connected to not only the internet but also to the trading platform, the monitoring and trading signals are not going to be reliable and regular. Power outages and Wi-Fi connectivity issues can interrupt service. To improve your connectivity, you can download a Virtual Private Server (VPS) that allows you to have a version of your EA online, hosted on an external server so it can run around the clock.