The foreign exchange or Forex is a global exchange market of national currencies. It is among the most lucrative markets in the world.
The reported worth of Forex is in 2021 is $1.93 quadrillion. That is more than twice the global gross domestic product.
Trading foreign currencies can be difficult, especially since it involves a lot of data analysis. It is where software and digital tools come into play.
What are expert advisors?
Expert advisors are computer programs compatible with trading platforms such as MetaTrader4 and Metatrader5.
They help you trade any market on the MT4 and MT5 platforms. But they are commonly used for forex trading.
How does an EA work?
Expert advisors assist you in analyzing and processing market data to look for high probability entries for trading. When the software detects opportunities, it notifies the trader.
Advisors essentially allow traders to trade successfully with minimal human input. But that is not to say that expert advisors are fail-proof.
There is no exact science to trading.
Human and automated computers cannot always correctly predict the direction of a market.
What is EA in Forex?
Forex markets are very complex. Many environmental, social, and political factors affect the rate of currency exchange.
These make trading complicated. Fortunately, there is a lot of software that can help make trading easier. One such software is Forex Expert Advisor.
Forex expert advisors are complex software that helps you trade better by analyzing data. These have built-in algorithms and technical indicators.
How do expert advisors work?
They are programmed to notify you when it is ideal to make a trade. Expert advisors can process thousands of data per minute and use preset settings to identify entry points for trading.
Because the forex market is active 24 hours a day, a single trader cannot manually analyze the market.
In contrast, forex expert advisors can run while you are sleeping. It allows you to multitask while it monitors and analyzes indicators.
It gives timely notifications that enable you to act on market signals without having to go
through market data.
Forex expert advisor is not only helpful for new traders. Experienced traders can use them as well.
An EA is created using Meta Quote Language. It can work for MetaTrader 4 (MT4) or 5 Meta Trader 5 (MT5).
Expert advisors use preset programs that are customizable to the user. They use yes or no parameters to set rules to create complex trading strategies.
Where can I get a Forex Expert Advisor?
Expert advisors can easily be bought on the internet. You can search for them on eBay, Amazon, or other shopping platforms and individual websites.
Installation does not require advanced technical knowledge.
It is installed onto your trading platform like any other app.
Is an EA the same as a forex robot?
Forex robot is another tool that helps you analyze trading data more efficiently.
The term forex robot is a colloquial term that refers to an algorithm used to identify market signals. Like EA, it is used to find opportunities to enter and close a trade.
But unlike EA, forex robots can automatically trade on their own using a preset parameter. These algorithms are integrated into trading platforms and can be automated to open or close a deal.
Moreover, forex robots can execute stop losses and stop limits.
Expert advisors are just that advisors.
They notify you about ideal times to trade. You are required to manually make the trade.
EAs leave the final decision up to you.
What can expert advisors do?
Every trader has a trading strategy. Expert advisors can be tweaked to match these strategies.
EAs are not created equal. Some EAs can work alone. This type of software is created with multiple algorithms which function as a single solution.
Other advisers are simpler. But they can be integrated to work on a single strategy.
Some EAs are easier to use. You can press the start button, and the software will work immediately.
Other products are complicated. They will need you to set parameters to guide them in analyzing data.
Both types of EAs have their pros and cons. What’s best for you will depend on your technical and trading skills. Also, on the strategy that you are working on.
Forex expert advisors can be programmed to work in a variety of ways.
So, essentially, the function of an EA is to analyze market behavior. That includes the behavior of a specific financial instrument to generate possible trading opportunities.
Some more EAs can also take control of your account, analyzing your account balance and deciding how much it can risk in a trade. It will also review your current stop losses, take profit, and trailing stops.
Expert advisors will use all of this information to help you find an ideal position in the market. And if there is an opportunity, you will get a notification immediately.
It will then depend on you whether to act on that opportunity or not.
What are the different types of expert advisors?
The kinds of EA can be categorized based on what they do.
News expert advisor
Forex is highly dependent on social, environmental, and political events.
Political events are the most common factor that affects the foreign exchange market. Civil unrest, war, and corruption can make currency rates fluctuate.
The news expert advisor analyzes news events and acts accordingly. If it detects news that will cause a significant shift in the market, it will notify the user.
Hedge expert advisor
The hedge expert advisor performs one of the simplest forms of trading strategies. It places two opposing trades and notifies you when it’s time to sell to limit possible losses.
Its strategy is pretty straightforward. Two positions will reduce potential risks but also potential profits. If the deal goes in your favor, you will earn a small profit.
The hedge EA does not need to analyze a lot of complicated market data. It will look for the best time to exit a trade to limit losses.
Adaptive expert advisor
The adaptive EA is the most sophisticated of all expert advisors.
This software can work in many ways depending on the set parameters. Users can change the rules anytime to suit their strategy or positions on the market.
Adaptive advisors can detect breakouts, focus on hedging, process the news, or other functions.
Scalper expert advisor
Scalper takes profits from small trades.
Like scalp traders, the algorithms of scalper expert advisers work the same way. They analyze market movements and look for small fluctuations that lead to potential profits.
Although scalping carries less risk, there is also lesser potential for gain.
Breakout expert advisor
Break out advisors process more information. It looks for signals or indicators of big market movements or trends.
When major trends are about to happen, it notifies the users of the ideal position. The uses can then decide whether to act on that signal.
Why use expert advisors?
There are many advantages to using forex expert advisors.
Although some EAs come with a preset program, you can customize them to work with your current trading strategy.
You can set your stop losses, the acceptable slippage rates, and take profits.
The flexibility also extends to other financial assets. You can use your expert advisor not only for currency exchange, but also for trading cryptocurrencies, indices, and other commodities.
Technical knowledge can come in handy when dealing with algorithms. Some EAs allow users to change the coding to suit them better.
But it is not a must. You can find many products out there that are user-friendly.
They can be easily accessed and changed without being tech-savvy.
Forex data is complex, interconnected, and unending. Experienced forex traders develop knowledge and talent in spotting signals through their years of trading.
For new traders, that is virtually impossible to learn immediately. Using a non-stop algorithm and data-hungry algorithms will level up your trading skills.
The amount of time it takes for the software to process information exceeds way more than the data humans ever could.
Additionally, EAs allow you to go about your daily life. You do not need to be monitoring the market all day.
EAs save you time and effort. These are the major selling points of using expert advisors in trading.
One of the good things about using a computer algorithm when trading is it can analyze data objectively.
Unlike people, computer software does not have emotions. They look at the number and give the most probable outcome.
It helps avoid losses resulting from fear, haste, and impulsiveness.
Things to remember when using forex expert advisors
Before you go looking for the perfect expert advisor for you, here are some things you need to think about and remember before and when using EAs.
Expert advisors are not fail-proof
Contrary to the name, expert advisors are not experts. And EAs are not better than human traders.
Yes, they can process more data in a lesser amount of time. They can also do complicated math. But they can be wrong sometimes.
Using an expert advisor will not guarantee that you have a successful trade every time.
EAs give you probabilities, not the actual future.
If you are thinking about using an expert advisor, approach it like you would any investment. Do your research.
Get reviews from websites and established traders. See video tutorials, customer reviews, comparisons of working efficiency of several EAs of the actual market.
There are software out there claiming to be EA but are a scam, so be wary.
EAs lack creativity
While human emotions like fear and recklessness can be dangerous for trading, completely taking away the human aspect from trading has more risks.
Humans are better than computers in many ways.
People are limited when it comes to the amount and time, we can process data. But our brains have a better way of processing information than computers.
Humans are more adaptive, more creative, and more resourceful than computers.
Automated software will not be as effective in coming up with creative ways to respond and adapt to sudden and unexpected events.
EAs need to be connected.
We have discussed above how EAs can help you analyze data even when you are sleeping or doing other things. While this is true, there are some requirements.
EAs need to be connected to the internet and the trading platform to function.
If you experience power outages and internet connectivity issues, your EA may not work properly. If not remedied, these problems can lead to missed trade opportunities.
How do you use Forex EA?
Hera is several tips when using a fore4ign exchange expert advisor.
Using forex expert advisors is easy, but you still have to do research, especially if you are a beginner.
Research is a necessary habit that every trader must acquire. It allows you to get all relevant information, so you can make informed decisions.
Watch and read reviews of brands and models of EAs that you are interested in.
Like we stated above, there are many scams when it comes to the forex exchange. Beware of products that promise very high returns.
Remember, EAs are not fail-proof. Their data analysis does not predict certainty. They generate probabilities. But sometimes, they can get it wrong.
Choose an EA that is compatible with your strategy.
While there are better coded EAs, there is no perfect EA. It all depends on how you use them.
In choosing the right EA, you have to consider the strategy you want to play. If you want to do scalp trading, choose an EA that is programmed for trading small trades.
One proven method of checking if you bought a legitimate product is to test it. But do not test it immediately in the live market.
To minimize losses and to get a feel of how it works, try it first in a virtual market. You can use a demo or practice account.
Can you use multiple EAs at the same time?
Technically, yes. Although not all expect advisors can work effectively when used simultaneously.
It is because their algorithms can overlap, meaning they can handle each other’s trades and functions.
But there is a loophole. EAs can be programmed using specialized numbers in the market entrance part of the source code.
Another limitation to using multiple expert advisors is overlapping communication that can cause the platform to lag.
When the EAs try to communicate at the same time with the server, errors can occur.
You may see a trade context busy error on the screen.
It is mainly because too much activity on a single client terminal can overwhelm or confuse the platform.
What are the best-rated EAs in 2021?
Here are some of the best-rated and reviewed expert advisors in 2021.
- GPS forex robot
- Itic software
- Forex factory
- Forex Gump
- Miner EA V3.0
Forex expert advisors are a helpful tool for both beginners and experienced traders. This software algorithm can process high amounts of data in the least possible amount of time.
It can generate probabilities by analyzing market signals and informs the user of ideal times to enter and close a trade.
But expert advisors also have their downside.
Because they are composed of algorithms, they lack creativity and resourcefulness.
Expert advisors can be unable to respond correctly to sudden and unexpected changes in the market.
So even if you are using expert advisors, it is not a guarantee of high profits.
There will always be losses. Forex trade is not an exact science or math, for that matter.
It takes years to develop excellent trading skills, and no EA can substitute that.
So, if you are a newbie, take advantage of every technical trading tool but anchor your expectations to reality.