The trick to getting better at making profit on the foreign exchange (Forex) market is having as much experience as possible. The longer you have traded for, the more familiar you will be with patterns and the more knowledgeable you will become.
However, these days, patience is becoming harder to practice. Nearly everything we want is at our fingertips, and whether we need to buy something, watch something, or find something out, we can do so instantly at the touch of a button.
Therefore, having to wait to hone a skill such as Forex trading can be difficult, as the longer it takes, the less money will be earned. Indeed, if you also make lots of mistakes while you’re learning, there is greater potential to lose money, and lots of it.
This is why many traders when they are starting out cannot wait to earn that experience and want to be good in the market from the get go. In this case, they can use a Forex robot or expert advisor (EA).
What is a trading robot or EA?
These are computer programs that use algorithms based on exchange market analysis to determine when it is best to enter and exit trades.
The automated system monitors the market 24 hours a day, and can execute trades at the precise moment it deems optimal or advise the trader of these opportune moments to enable them to manually authorise the trade.
Is there a difference between a Forex robot and an EA?
While Forex robots can automatically trade on behalf of the financier, this is not the case for EAs.
These still require the trader to agree to the action and complete it themselves, after having received the recommendation by the EA. Therefore, the advisor simply generates signals for the trader, instead of actually performing trades.
Like other artificial intelligence (AI) programs, EAs can be adjusted according to your requirements. This enables traders to be confident their EA will act the way they want, while still responding to the technical analysis.
There is not just a difference between a Forex robot and an EA, as there are also various types of EAs.
The Breakout Expert Advisor, for instance, opens a trade when the price surpasses resistant and support levels that have already been set.
Alternatively, the News Expert Advisor determines what course of action to take based on big events in the news, and any subsequent significant price movements.
The Hedge Expert Advisor helps traders make important decisions by providing information on two opposing positions.
Lastly, the Expert Advisor Scalper works by making small wins multiple times a day. In fact, they could trade up to 500 times in 24 hours, opening and closing accounts constantly. The goal is for these minor profits to accumulate and earn the trader a substantial amount of money.
How do robots or EAs determine how to act?
AI has advanced considerably over the last few years, and that includes in the Forex trading world. Forex robots and EAs are good examples of this, as they analyse the market in different ways to estimate what will happen next, and therefore, create an action based on this prediction.
They can use technical indicators and Forex trading patterns to see what the current trends in the market are, and whether there will be a steep rise or decline in prices in the near future.
EAs can also be programmed to only use a certain amount, such as around one per cent of the account balance, so traders can set limits to reduce their risk.
By being able to set these parameters, the trader can remain in control of the actions, as the EA will only generate suggestions based on your preferences.
Are EAs allowed to be used?
As EAs and trading robots are programmed with AI, it is sensible for traders to check whether they can use them with the prop firm they have signed up to.
This needs to be determined at the start of trading, and even at the beginning of the one-step evaluation process, enabling traders to find another prop firm if they are unable to use the technology they had in mind.
Some prop firms might allow the use of some EAs and trading bots and not others, depending on what they are programmed to do and how advanced they are.
Therefore, if you have your heart set on using a specific EA and this is not allowed by the prop firm, you will need to decide whether to look for an alternative trading advisor or another prop firm.
How to choose between EAs?
Choosing between the different types of robots and EAs can take some time and consideration, but it is important not to rush this, so you find the one that suits your interests best.
– Do you want to control trades?
If you want the technology to act on your behalf, and trust the algorithms have been set up so they can respond to events according to your interest without being prompted, opt for a trading robot.
Although many traders worry they do not have as much control with a trading robot as they would with an EA, there are many advantages to this type of AI.
For a start, they can operate all day long, which means they are still working hard when you are fast asleep. Unless you want to be on the market 24 hours a day, this enables you to enter or exit trades at the optimum time, even if it is the middle of the night.
Therefore, you will never miss out on an opportunity to earn money!
Alternatively, if you want to have more control over your trades, managing the course of action based on the advice and information you’ve been given, an EA might be better for you.
With these, you are still able to override the guidance and do what your gut instinct tells you. However, having done comprehensive analysis, it is more than likely that you will follow the lead of the EA in the end.
– Multiple trading strategies?
Traders looking for an EA that offers several different trading strategies could be interested in Itic Software.
If you want some variety with your trading, but still want the plans to be based on comprehensive analysis, this could be the perfect solution.
It provides either a fully automated forex trading system or signals depending on relevant strategies, and gives traders useful tools to use, including Forex latency and hedge arbitrage software.
Working within the Forex market involves taking risk, but those who want a certain level of certainty should consider the Forex Combo Expert Advisor.
Even though it uses an unusual trading algorithm that involves not one, but four, strategies, it is still known for its reliability. For someone starting out in the industry, this is invaluable, so they can be confident their money is in safe hands.
Test out your EAs first
Like anything, it is important to test it before committing to it. That is why it is sensible to have a go with a particular EA before signing up.
Many EA providers will allow traders a practice run prior to using them on their trading account, without any charge.
This enables traders to see how well they can get on with the EA; what analysis it provides; and how easy the technology is to operate.
When testing it out, try to pay attention to its usability, the strategies it adopts, how successful its signals have been, and how reliable its functions are.
These will give you a good idea of how it will perform in the long-term and, subsequently, how much money you are likely to make by using it to determine your trading actions.
There are many EAs available these days, so it is worthwhile having a look around to find something that suits your trading needs and requirements best. Once you have selected a few that interest you, give them a test drive and see how well you get on with them.
It is only by using them, after all, that you will learn more about how they work, and can either see yourself using the EA to launch your trading career, or you can’t. If the latter is the case, at least you know you need to start looking for another one to achieve this goal.
Once you have found the right EA for you, however, this could be the kickstart you need to get going in Forex trading.
It can certainly be daunting making your first trades when acting alone, which is why having an EA to guide you through the process and give you a greater guarantee of securing wins is a good idea, reducing risk at the beginning of your trading career.