When it comes to forex trading, predicting the movement of the prices and deciding what is the best move to make is extremely difficult. Of course, there are some methods and strategies that can be implemented during everyday trading. However, even those are only a starting point, in a game where precision is everything.
Even expert traders need to rely on any tools they can get in order to make the best possible choices, which is why they often use Expert Advisors (EAs).
What are EAs?
As mentioned, EA is a piece of software that analyzes the markets and tells traders when is the best time to make a move. Some can even make a move on traders' behalf and execute trades according to certain parameters that the trader has previously added in the form of instructions. For this reason they are sometimes referred to as trading robots or as algorithmic trading.
EAs are typically deployed on MetaTrader 4 or 5 trading platforms, and you can use existing ones, or even create a unique one on your own. It all depends on what trading parameters you prefer, your strategy, and alike.
Of course, you will need some technical knowledge when it comes to writing programs, as EAs are written in MetaQuotes Language, also known as MQL.
What are the benefits of using EAs?
Obviously, EAs sound like very useful tools, but you might be wondering what are some of the advantages of using them?
In truth, there are quite a few positives which will definitely show you why you should consider using them.
1) Don't miss good opportunities
You probably know that forex markets are available 24/7, unlike stocks. That means that a great trading opportunity that is perfect for you (based on your preferences) can arrive at any time. You might not be available to take it when it emerges, or it might happen in the middle of the night, or even when you are at work.
It would be a shame to miss it, but with an Expert Advisor programmed and standing guard — you don't have to. Software like this can carry out trades even when you are not there, and any trading opportunity that comes your way will be used.
2) Cut emotions out of the picture
Another example is to use EA to eliminate the emotional factor from trading. People often underestimate the power of their emotions and their ability to overwhelm. As a result, a few successful trades make us feel invincible like we cannot lose. With more and more good moves, we also start using more of our money for trading.
Then comes that particularly risky trade that would score you huge profits, and you are strongly encouraged to take it by your previous successes. After all, you cannot lose, right?
Wrong. Making that risky move is exactly what will end up costing you your entire investments. However, it doesn't have to be that way. You can keep reminding yourself to follow the rules that you have set yourself, and wait for EA to give you the green light.
Do not let fear or greed guide you. Instead, use logic and proper calculations. That is the only way to be successful, as the market will not react to your emotions.
3) Use EA to eliminate stress
Similarly to how your emotions can overwhelm you and make you feel invincible, the same can happen with stress, only with a lot. Trading is stressful, as you keep worrying about missed opportunities, potential gains, and whether or not you made a smart move.
This is especially true if forex trading is your main source of income, which is true for a lot of people who become so good at it that they start relying on it completely.
However, with EA at your side, you can eliminate worry and stress. Simply set it up to execute trades automatically when good opportunities arrive, and stop thinking about the market. All you need to do is come in from time to time to check the state of the market and collect the spoils. Not only will this save you from stress, but it will also provide you with a lot more spare time to dedicate to other activities, research, other work, and mire.
4) Make your trades more productive
Trading is stressful, emotional, risky, as well as complicated. That means that you need good concentration in order to make a good trade, and every trade deserves your utmost attention. But even if you do your best, you can only focus on a single trade at one time. This is not good enough if you wish to work with multiple pairs.
But, if you use an EA, you can eliminate that problem as well. As a piece of software, EA can consider a lot more variables simultaneously than you ever could. That way, you can instruct it to follow the performance of multiple pairs that you might be interested in, and call the shots whenever there is a beneficial price movement.
This is something that you physically cannot do, and it has nothing to do with intelligence or trading skill. After all, we are only human.
Are there disadvantages to using EAs?
Of course, after covering all those pros, it is only fair to cover the disadvantages or cons of using an EA. There are not many of them, but you should know about them before you decide to start using them.
1) Lack of responsiveness
When you trade forex, you quickly learn that responding to real-time news is a sure way to quickly react to upcoming opportunities. However, if your EA cannot do this, it would ignore hints and important reasons that would indicate that it is time to make a trade.
You can, obviously, avoid such issues if you can afford to sit at your desk and keep track of the new reports and the market's reaction to them.
2) EA can only do what you tell it to do
EA is not true artificial technology, and as such, it cannot make decisions. All it can do is follow instructions — the ones that you gave. Despite the fact that it can do as many calculations as necessary in seconds, it can still only act in a way it was programmed.
If there is ever a good trade that doesn't fall under the parameters that you specified, your EA will not respond. It is bound by limitations, and it cannot and will not act beyond them. Most of the time, this is good, as it helps you avoid bad trades. However, there will be opportunities that you will miss for this reason, as the EA will always play it safe.
Do your research
In order to avoid negative surprises with your EA, it is important to do your research about the software that you plan to use. Read up on it, do your own tests, check other people's experiences.
Be prepared for the fact that, from time to time, you might have to modify the instructions that you gave to the software, as the market (or your strategy) might change in accordance with the new situations and developments.
Lastly, always remember that the currency market is not regulated. As such, it is an excellent breeding ground for scammers who will try to trick you and steal your money in any way. That means that you can try to pay for a fake EA, offered to you by a scammer. This can easily be avoided if you know what to look for, such as ridiculous promises and unrealistic claims.
Remember to always try to think logically and clearly, instead of falling victim to greed, as many traders tend to do.
Conclusion
With that in mind, we leave you to look into different EAs and make your choice. You have to decide whether or not to use them in the first place, and then which one is the best. You will need some searching to do, and trial and error are inevitable, but if you can handle that and have a bit of patience, it won't be long before you start making a great profit while engaging in safe trades.
Just do your research, set things up, and remember to still keep an eye on things, but don't allow yourself to get stressed, or consumed by greed. Neither will help you and if you can control them, you can make excellent money from the forex market.
Author: Ali Raza - A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and writes extensively about the financial markets and fin-tech industries.
