Even years of profitable trading and a good trading system do not guarantee a stable profit in Forex: sooner or later, the human factor intervenes.
Following the principles of universal automation of life, trading advisors appeared on Forex – nothing more than automatic trading systems. Behind each of them is a simple algorithm for opening and closing a deal, as well as its support under certain conditions.
What is a Forex advisor?
Forex advisors are indispensable assistants to a trader in the international currency market – trading robots or just bots. No truly successful Forex trader can do without trading robots these days. Expert Advisors trade around the clock, knowing neither tired nor emotions. According to statistics, 88% of successful traders are trading robots.
That is, Forex advisors are specially designed programs for automatic work on Forex, which make it possible to carry out transactions without human intervention. All you need is to understand the settings of your Expert Advisor, set the necessary parameters, in accordance with which the robot will act and receive profit.
Thus, the advisor automatically monitors trends in a specific period of time. The Forex advisor uses indicators or other analyzers, the advisor itself examines and compares various conditions and market factors, after which, based on its analysis, the advisor opens deals, and all this is absolutely automatic.
In other words, this program opens and closes trading positions in accordance with the advisor’s settings, that is, it works according to a specific algorithm. The programmer who created the advisor puts into its work a certain trading strategy, the use of certain indicators, taking into account certain conditions, factors and market trends, on the basis of which deals are opened. Almost all online trading brokers on the Internet have this feature enabled on their platforms. The trader only needs to set up and optimize the EA correctly.
Should You Use Expert Advisors in Trading or not?
Those who understand well in forex trading can always upgrade their EA with the current market situation. It’s no secret that the forex market itself is dynamic and constantly changing. What worked six months ago may not work now, and so on.
In general, trading advisors have a right to exist with one caveat: they must be used wisely. Automatic trading is absolutely not suitable for novice traders who have not yet tasted the joy of manual trades. But, as a rule, it is they who are attracted by the developers of trading advisors, drawing bright prospects. A beginner trader, inexperienced in trading, may have the opinion that it is enough to install an advisor – and the money will flow like a river.
Experienced traders know that not everything is so simple, and they continue to test more and more new trading robots. This is probably the right way: a successful combination of independent and automated trading with constant monitoring and periodic optimization of mechanical trading systems. The best option is to develop your own trading strategy and create an Expert Advisor based on it, either yourself or by asking a programmer for help.
So, is it worth it to unconditionally install on the platform trading advisors that are offered in the public domain on the network, or to acquire a “pig in a poke” in the absence of the necessary experience and sufficient knowledge? Yes, if you are willing to risk your deposit. If there is no such desire, it is better to pay attention to independent trading, understand what Forex is, and only then make an informed decision about the possibility of using an advisor.
Cons of Trading Advisors
First of all, trading advisors do not have any intelligence, as newcomers to Forex often believe: as a rule, their actions are based on indicator readings, which in many cases are false. Also, these trading robots are developed by ordinary people who are inherent in the ability to make mistakes, therefore, sooner or later, an error may “pop up” in their installations, which will lead to the drain of the deposit.
The Expert Advisor is not able to independently make a decision if the market situation changes radically: it will continue to open trades, following the algorithm prescribed in its settings and increasing the potential risk with each new trade.
Any even the best trading system, embodied in a profitable Expert Advisor today, may lose its relevance tomorrow, which is why trading robots tend to “become outdated” and require constant monitoring and periodic optimization.
The Bottom Line
Despite the presence of serious disadvantages of trading advisors, they are very often used in the Forex market to perform routine tasks. If you also set foot on this path, then always carefully monitor the operation of the program. Remember, advisors work according to an established algorithm and cannot think like a person.
You need to carefully study its work, thoroughly understand its settings, and also find out what algorithm this particular advisor uses. It is best to do this on a demo account, and then think about transferring it to a real account or not.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius