Expert Advisors (EA) software trading - Automatic trading

Expert Advisors (EA) software trading - Automatic trading

The excitement of trading forex and following the Markets and economic news is every trader’s dream to reach maximum profitability. What is even better is not having to spend a lot of time, and still to keep making profits. It’s almost having a passive income, but with the minimum effort from a trader’s perspective.

A simple solution for saving time in trading is a very common trading practice which entails special software. This special software is added to a trading platform, and it’s called Expert Advisor (EA). There are many Expert Advisors (EAs) which can satisfy many trading strategies and styles.

Relatively small size computer programs, EAs or trading robots, are used to place trades on behalf of traders. These programs are designed to analyze market conditions or generate trading signals and according to predefined settings, parameters, and rules to place and execute trading orders accordingly. These trading rules can be based on various market indicators, like Moving Averages (MAs), Support and Resistance Levels or other mathematical equations.

The main goal of auto trading is the use of robots, so traders can have successful and profitable trades, no matter the Market’s trading conditions. In addition, it takes out any human error or a bad decision which may negatively affect an active market portfolio.

Expert Advisors and automatic trading strategies have several potential benefits when they are used correctly:

Using all the above advantages, how does an Expert Advisor place trades? What drives its final decision to open and close orders?

We can categorize all robot trading and their trading decisions into two (2) main categories:

  1. Data analysis: Auto-trading systems can process and analyze enormous amounts of data, including historical price data, several media feeds and other relevant information. Recent machine learning algorithms can be used to identify price correlations and trends within the data processed.
  2. Pattern recognition: Other robot trading machines are designed to place trades upon recognizing certain patterns in market data. Having also checked historical data and patterns, systems can make predictions about future prices or price movements and market conditions, like a start or an end of a trend.

It is important to note that automatic trading also has certain risks. If a trader does not set up the parameters and rules correctly, an EA may start placing trades and a trader’s portfolio can be lost very quickly. For this reason, it is always wise to contact the EA provider for explanations on how the settings of an EA should be adjusted and saved. Back-testing is also useful to understand how an EA works, when it places trades and when it closes the positions.

The Forex Market is quite volatile and market conditions are unpredictable. Therefore, a trading strategy which is tested, and works does not mean that it will keep working effectively forever. Adjustments, detailed research, and tests should be done constantly, and especially before deploying an automated trading system upon real money trading account(s). Having proper risk management measures is the key to success, since there is no EA which promises 100% guaranteed profits forever.

Categories / Tags: Forex, Forex Trading, Trading

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