Forex Advisors

Forex Advisors – a Brief Journey into an Automated Trading

Trading on Forex is not easy. It is especially difficult when emotions and greed bar from rational thinking. Many traders are already familiar with the process, which simplifies trading and relaxes. How not to lose the deposit and not to give last money for nerves treatment while trading on Forex? Very simply. Meet Forex advisors.

What are Forex advisors and what are they needed for?

Forex Expert Advisor is a special program written for trading platforms such as MetaTrader 4. Advisors are often called trading robots, experts or EAs. All these concepts can be united by the term of automated trading.

An advisor trades on a live account without trader’s intervention, or semi-automatically, that is, warns its “master” about the actions and asks confirmation. Developers together with economists write Forex robots in the MetaQuotes Language Version 4 software, or MQL4. Normal user who is familiar with this language, could easily write his own Forex Advisor.

The EA main task is to simplify trading and get profit. It is based on an algorithm that consists of three stages:

1. Market analysis: the advisor analyzes the market situation and looks for ways to enter the market.
2. Orders opening: two or three indicators send signals and the advisor opens a position.
3. Orders closing: Stop Loss and Take Profit orders are activated, or a signal of a trend reversal is sent, and the advisor closes the position.

Stop Loss is a pending order, which a trader uses in order to limit losses. The trader sets Stop Loss in advance at the level, where the order should be closed if the price goes in wrong direction. The order is executed automatically.

Take Profit is a pending order that a trader uses to fix profits of a trade. The trader sets Take Profit in advance at the level where the transaction will be in profit. The order is also executed automatically. More details here.

To be or not to be? Pros and cons of EAs

Strengths of Forex advisors

1. Emotions control
   Robots work following the given algorithm, they do not know fear, greed, anger. Unlike the trader EA won’t be afraid and close the transaction, it won’t go off at half-cock. And if it earns a profit, it won’t go back on the market for more prey. The emotional component is being deleted.

2. Round-the-clock market monitoring
   Robots monitor the market 24 hours a day. Many traders are not traders by vocation: they can be managers, carpenters, firefighters, etc. They can hardly combine a busy work schedule with a Forex trading. Then trading robots will help with that, as they do not sleep and get tired. They save time and bring profit.

3. Fast response
   Modern technologies perform tasks faster than a human: a calculator will compute how much will be 356*28 in a fraction of a second, while a sixth-grader will do calculations in columnar form for several minutes or even longer. So advisors are the same. Forex robots react immediately to the market situation, since it is factored in their program. The trader can be slow while deciding to open the order or not. Advisors enter the market perfectly, in the same second as soon as the necessary signal arrives.

4. Multi-armed bandit
   Forex Expert Advisors can monitor several currency pairs simultaneously. This opens up new horizons in trading. Traders need no longer to sit in front of the monitor for a few hours and switch from currency to currency.

5. Beginners luck
   EAs make life easier for a beginner, because a good robot can do the whole job for him. An inexperienced trader can observe the actions of advisor and learn to read the signals on the market.

Weaknesses of Forex advisors

1. Error 404
   Trading advisors are written by people, and as we know, all the people make mistakes. Errors in the system can lead to deposit loss. It is dangerous to rely on the robot completely.

2. Soulless robot
   Forex robots work only following the given strategy. However, economic and political news, rumors on the market, force majeures affect the price movements of currency pairs. Robots can not take them into account. And they have no intuition, which is useful for the trader.

3. Everything flows, everything changes…
   The market is unstable. Market behavior, trading strategies are changing, so advisors quickly lose their applicability. If not to reconfigure the robot in time, it will operate under the old scheme and lose the deposit.

4. A pig in a poke
   To download the advisor for free or even to buy it – it’s like to order shorts in the Internet shop: you never know what will be the quality, whether a size and a color will fit you, will a seller send you the shorts at all. An attractive description does not guarantee that the robot is really good. Perhaps some crafty evil genius designed it intentionally so that traders lose money. And it is quite difficult to develop own robot by yourself.

5. Stop Advisor
   Some brokers prohibit trading with the help of robots.

Types of trading advisors

There are many advisors on the Forex market.They are divided into the following types:

• trend advisors;
• scalpers;
• Martingale system advisors;
• multicurrency advisors;
• network orders advisosrs;
• advisors working with or without indicators;
• advisors based on neural networks;
• combined advisors.

Where to get the advisor?

There are three ways to get the trading robot: to buy, to download for free, to write your own. Some advisors are already built in the MT4 trading platform. This may seem a little. Therefore, one can download for free or buy more trading robots through the Internet. To say what advistor is better – paid-for or free – is difficult, since there are many scammers and they spread their products as for the money, and free of charge.

One can get free EAs in Code Base library of robots and indicators, which is already built in MT4 terminal. How to do that, watch in the video:

You can also buy advisors (paid-for and free) in MetaTrader Market or to order the robot by experienced developers, if you can not find one that will satisfy you.

To choose a good advisor is not easy. So as not to make the wrong choice, then follow some little tips:

• Check the seller’s reputation, find out more about him.
• Then ask him about the principles of the EA. The seller needs to know his product and answer all buyer’s questions.
• Pay attention to the robot profitability: it should be an average of 15-20%, but not more than 50%. Too high yield says either about the aggressiveness of the robot, or the seller’s lie.
• Remember that sellers can embellish reports on advisor profitability in the past: forge charts, readings, etc.
• Read reviews of the assistant that you want to buy, look for its analogues.

So, you have decided what the advisor to buy. Test it before you start. How to do it?

1. MetaTrader 4 trading platform allows to test EAs. This function checks the operation of the robot based on its historical data. That is, you can see the Expert Advisor actions in the past and whether they were effective while trading. How to activate the tester in MT4 follow the link.
2. Trading robot can also be checked on the demo account. However, this method doesn’t give 100% result, since there are no slippages on training account.

The trading robot will help you to trade, but it won’t do everything instead of you. Remember that the market is very volatile, the robots obsolete. Pay close attention to the applicability of the EA. And better do not rely completely on it, work with your mind. And remember that advisors do not give a 100% guarantee of earnings. Be careful and have a profitable trading!