EA Trading: Identify, Analyze, and Execute Trades Automatically
The trading world has seen tremendous changes in the last few decades. Earlier trading was all about knowledge and identifying the right opportunity. But now, you need precision, speed, and automation to have a successful trading journey.
That’s the reason the scope of EA trading bots and software is increasing. If, even in the present time, you are not using these technological solutions, you are lagging behind.
But worry not. In this blog, we will have a detailed study on expert advisors with pros, cons, and how to install or develop them. So, stay tuned to learn to transform your trading journey using technological solutions.
What is an Expert Advisor?
An Expert Advisor(EA) is a technological solution developed based on highly advanced algorithms assisting traders in identifying, analyzing, and executing trades automatically.
In simple language, Expert advisors are robots that are designed specially for trading. These tools monitor the market, identify buy or sell opportunities, and place trades on traders’ behalf based on predefined conditions.
Here's a quick look at what you'll read
An EA is a computerized product used with MetaTrader to decide when to trade, guided by set rules and rules the user provides.
You can make money through EA trading if your strategy has been tested and the market situation meets the algorithm’s needs. Still, the outcomes can be different, so it’s important to keep an eye on the system and make updates regularly.
Trading on the EA platform is safe when you use reliable software, manage your risks and keep an eye on your activities. Even so, if the market is volatile or the settings are not right, you can still lose a lot.
To start EA trading, choose a reliable trading platform like MetaTrader, install a trusted EA, set your trading preferences, and test it on a demo account before going live.
How Expert Advisor Works
Expert advisors’ tool watches the overall market conditions, organizes technical analysis, and determines opportunities based on a preset model.
Let’s see an EA Trading Forex Example: suppose a trader uses the RSI and Bollinger Bands indicator to identify and execute trades in EUR/USD. So, the trader develops expert advisors to buy or sell whenever these tools indicate that.
Now, suppose the price flows near the upper band of Bollinger and near the 70 level in RSI. So, the Expert Advisor will give you a selling alert identifying the overbought condition. The bot can even place the trade on your behalf if the trader allows it.
How to Install or Develop Expert Advisors
You can find numerous free and paid EA trading software on MetaTrader 4 and MetaTrader 5. Each of the EAs has its own features, accuracy, strategy, and way of working. You can select the best accordingly.
The best part about bots is that you can even develop your own EA. Let’s have a look at both ways:
Create your own Expert Advisor:
- To create your own expert advisor, you need to develop a code or program. You can do so by using MQL 4 on Meta Editor.
- Now, define the trading instruments, market conditions, technical analysis indicators, tools, and concepts based on which you want your expert advisors to make trading decisions.
- With the above factors, you need to define your risk-to-reward ratio, leverage, maximum drawdown limits, capital used per trade, and other fund management criteria.
- Once you have developed your EA, it’s time to backtest. There are multiple backtest software available; you can test your EA on them. Customize your EA according to the backtesting results.
Installing Expert Advisor on MetaTrader 4 or MetaTrader 5
Don’t have coding knowledge? Worry not; you can even download an EA trading bot for free or buy an EA on MetaTrader platforms. Here is how:
- Open MetaTrader and explore the list of expert advisors. Select the ideal option according to your requirements.
- Create a folder and save your expert advisor. Install, copy, and paste on MetaTrader 4 or MetaTrader 5.
- Go to the settings and adjust the trade criteria accordingly. Test the EA on demo accounts.
- Once satisfied with the demo accounts, start using the EA on real trades. Go small and steady to avoid any unfavorable trade outcomes.
Pros of EA Trading
Diverse Market
The fundamentals for trading in diverse financial assets are the same. The technical analysis tools or concepts your EA is using can be used for trading a variety of instruments. So, you can trade in currency pairs, cryptocurrencies, stocks, indices, and other financial assets using the same EA trading strategy.
Boost Speed and Save Time
EA analyzes a large amount of data in just seconds. It ultimately boosts your speed of decision-making. Also, trading is a job that requires significant time daily. However, when using EA, the robot will do all; you just need to check its authenticity.
Round-the-Clock Analysis
Watching the market is quite important for traders. One event can change all trading conditions. Expert advisors monitor the market 24/7 and provide traders with alerts when something happens.
Emotionless trading
Associating emotions such as greed, anxiety, stress, and fear with trading may result in negative outcomes. When placing and executing trades manually, avoiding emotions is kind of impossible for traders. However, with EA, decisions are solely based on preset criteria that result in emotionless trading.
Customization and Backtesting
Expert Advisors allow multiple filters and settings. You can customize the EA according to your strategy, risk, time frame, and other criteria. Also, you have the option to backtest the tools to check their accuracy before using them.
Cons of EA Trading
Complex
Developing or even using the expert advisors’ bot requires technical skills, and not every trader has that. So, people lacking programming and coding languages may face problems in using them effectively.
Need for human intelligence
Using EA and solely depending on EA are different approaches. Even the best EA requires human intelligence and monitoring. Basically, you cannot remove the human touch from trading.
False Signals
EA works on preset rules. This means that during a high volatility period or choppy market conditions, they work on the same rules. In such a scenario, an automated bot may give false signals that are higher.
Quality Dependence
Numerous EAs are available on the market, but not all offer the same results. So, if you have failed to select an ideal EA, you will not get the desired outcomes.
Ignores Fundamental Analysis
EA generally takes technical analysis conditions into consideration when planning and executing trades. However, fundamental market conditions, such as big news and economic and geopolitical events, affect the market the most.
How to Select an Ideal EA
- Check the success rate and read the EA trading review. Select an EA with a good track record.
- Cost is the most important element. You can even find EA for free. However, their quality is questionable. And paid tools can be expensive. So select a tool that is good in quality and that even suits your pocket.
- Practice your EA on demo accounts to test its effectiveness and find out its suitability.
- Even the best EA will not be suitable for you if it is not in accordance with your needs. Test the compatibility of EA according to your trading capital, instrument, time frame, risk, and related factors.
Bottom Line
Integrating Expert Advisors in your trading journey has not remained a choice but has become a necessity. Nowadays, speed, precision, and analysis are most important, and EA trading will give you.
EA can make your trading journey as smooth as butter. However, you just need to combine them with your own intelligence. Even now, if you face any problems or issues in EA trading, you can seek Carlos and Company’s assistance. Our team combines automated software and human intelligence to generate valuable trade signals. Reach out to try our demo trading signal today.