Expert Advisors are quite sophisticated software tools used in forex trading. The advisor is designed around a specific set of algorithms, and excutes trades from your trading platform.
Most forex traders fail because they fall prey to the human emotions of fear and greed. However, trading with an Expert Advisor removes these emotions so that trading can be executed on a purely logical basis.
Under the influence of greed or fear, traders will frequently either stay in a trade in order to grab extra profit when the trade should be closed, or exit a trade prematurely and lose out on profit. The beauty part of trading with an Expert Advisor is that it trades with a plan – not emotion – and does so 24 hours a day during market hours.
The Expert Advisor is constantly scanning and monitoring the market, and executes trades based upon its underlying parameters. And unlike a human, it is also capable of monitoring indicators, support and resistance levels, and a host of other factors in a variety of timeframes with lightning speed, and making immediate trading decisions.
Today’s market offers quite a variety of Expert Advisors in a wide range of prices. There are so many factors to consider; for example are they currency specific? Are they timeframe specific? Do they attempt to predict trends or do they follow them? What about risk management? Most I’ve seen recommend 2-4% risk, but there are some out there that are low risk (1-3%). Do they support stop losses or do they continue to hold a trade – even thru downturns – until a profit is achieved?
As you can see, there are many factors to be considered when purchasing an Expert Advisor. Some other things you’ll need to know are what trading platform(s) the EA will run on, whether or not you can run multiple EA’s on one account, and whether or not it can be used with a mini account.
Before purchasing your Expert Advisor, there’s one more point to consider. When trading with an EA, it makes your trading decisions, and it resides on your computer. Once a trade is initiated, the trade is in the hands of your broker. If the power goes out in your area, or if your computer dies, you will have an unmanaged open trade.
If you are located in an area that is prone to power failures, you might want to consider opening a VPS (virtual private server) account and loading your trading software on it. That way, your platform will continue to run without you monitoring it, and it can be accessed from any location.
Expert Advisors are definitely helpful tools. Do your homework and conduct some in-depth research before making your purchase and your experience should be a good one.
Author: Linda GallaThis author has published 2 articles so far.