Contrary to what you might expect, a forex expert advisor is not a person who advises you on how to trade. In fact a forex Expert Advisor is a very sophisticated trading software tool. The forex Expert Advisor is a piece of software written specifically for the MetaTrader Platform. An Expert Advisor can just advise traders which trades to make or can be programmed to automatically execute the trades on a live account. Forex Expert advisors are written in a proprietary programming language called MQL4 or Metaquotes language, version 4.
MetaTrader 4 is a trading platform that is free of charge and convenient for trading on the Forex market. The MT4 is also one of the most popular trading platforms available. The MetaTrader Indicators, MetaTrader Forex Expert Advisors, MetaTrader scripts are built-in and based on technical analysis.
When trading forex, emotions play a big role. Take the example of a trader executing a trade in the hopes to make a profit off it but infact ends up losing the trade. The consequent trades placed are majorly controlled by the emotional decisions made, which are built upon the outcome of the previous trade. The advantage of trading with a forex Expert Advisor removes these emotions so that trading can be executed on a purely logical basis. Meta trader forex expert advisor performs the functions related to money management, cutting losses, beginning of new trade, closure of beneficial positions.
Emotions and psychology play a critical role in forex trading so often, that a trader might hold on to a position in an effort to grab that last pip of profit even when logic states to exit the trade. Conversely, a trader might exit his position prematurely out of fear, losing out on potential profits. The Forex Expert Advisor has a plan and sticks to it without any regard to outside influences, and does this 24 hours a day during market hours. Having said that, a forex expert advisor is like just a tool/software, but you cannot rely completely upon. Meaning that you cannot switch to a forex Expert advisor and expect to make profits from your positions all the time.
There are many different types of forex expert advisors built to achieve a specific purposes. Example, one type of forex expert advisors are built to help you achieve profitable trades in the EUR/USD currency pair. Each type of forex expert advisors is built upon a specific set of rules, sits on your trading platform and executes your trades. Some expert Advisor’s are currency and/or timeframe specific while others are not. There are some forex Expert Advisors that predict trends while other EA’s execute trades based on the trends. Some forex Expert Advisors are low risk (1-3%) while others recommend 2-4%, but most are adjustable. Some EA’s close out trades only when a net profit is achieved, holding tight through a drawdown, whereas others will utilitze a stop loss. The list goes on.
The use of Metatrader forex expert advisor excludes the human factor helps traders to test their Forex trading strategy based on historical data. Testing forex trade strategies helps traders to establish back-tests of Forex experts besides optimizing the Forex Expert Advisor’s parameters via the built-in optimizer. The use of forex expert advisors gives traders the possibility to test their own strategy on historical data; this means traders perform their own back-tests. Before making use of an expert advisor in your live accounts, always test the EA’s on a demo-account also known as a forward-test. The use of expert advisors will allow traders to see potential obstacles to your Forex trading strategy.
Installing a Forex expert advisor
Forex expert advisor should have a .ex4 or .mq4 file extension, mq4- source code, ex4- compiled code. First of all it is necessary to copy the file to the MetaTrader Forex Experts folder of a root/same directory where you have installed your MetaTrader 4 terminal. After restarting the MetaTrader, the Expert Advisor should be added to the list in the Navigator window. You should realize that the colored icon corresponds to mq4 file. If you have an ex4 file only then an icon in the window Navigator will be grey.
The same grey color may mean that errors in a source code have appeared. In order to check for Forex Expert errors you can press F4 to open the MQL4 editor to load the source code. Press F5 in order to compile the MetaTrader expert advisor. If everything is successful the sentence ‘0 errors’ should appear in the conclusion window. Warnings however are not errors and their presence does not hinder successful compiling.
Before purchasing an Expert Advisor, there are many questions to be researched and answers to be considered. It is also important to be sure the EA will run on your trading platform, that you can run multiple EA’s on one account, and that it can be used with a mini account, if that is your account type. Another point to consider when trading with an EA is that it makes your trading decisions, and resides on your computer. Once a trade is initiated, the trade is in the hands of your broker. If the power goes out in your area, or if your internet connection drops, you will have an unmanaged open trade. It is always advisable to make use of a Forex VPS hosting in such cases. Lots of forex traders rely on Expert Advisors to do their trading. With a bit of research, get all your questions answered, and you should have a very successful trading experience by making use of a forex expert advisor.