Forex trading has become less time-consuming, thanks to Experts Advisors (EA) who do some of the most important activities in trading. It acts as a trading robot that follows commands and programmed information by the human trader. EAs tracks market movements and also generates important trading signals when it identifies trading opportunities.
The Forex Expert Advisor
The main purpose of Forex Advisors is to provide Forex signals on a daily basis and identify any possible trading opportunities. Just like a Forex robot, EAs also does the automation in the Forex market that also helps spot relevant market patterns and provide signals to traders.
What draws a line between these two automations in Forex is that the Forex robot has the ability to place an order on behalf of the trader while EA requires the human trader to personally place it. EAs have these pre-set rules that are all programmed to it. However, not all EAs follow the same exact rules. The greatest advantage of EAs is similar to any other automated system in Forex, it keeps traders away from any emotional involvement, something that almost all new Forex traders tend to face.
You can either purchase or download EAs from the internet or use the preinstalled one in your MetaTrader 4 and MetaTrader 5 trading platforms. The most common types of EAs include The Hedge Expert Advisor, The News Expert Advisor, the Breakout Expert Advisor, and the Expert Advisor Scalper.
How Does an Expert Advisor Work?
There are many ways for EAs to operate. There are some EAs that use technical indicators like MACD and Moving Average. There are also other EAs that look for relevant trends and identify breakouts. Through the use of different technical indicators, an Expert Advisor can analyze the market as well as the performance of the financial assets. From that specific information, EAs can generate more accurate trading signals. In some circumstances, it is also seen that some traders are opting to use Expert Advisors rather than Forex robots.
What sets EAs and trading robots apart is that EAs produce signals but are unable to place orders automatically, something that trading robots have the ability to do. But then, these two terms, EA and Trading Robot, are mostly used in the forex market and they are interchanged most of the time. You shouldn’t confuse these two because EAs have a lot more to do than trading robots.
If you want less human intervention on your trades, it is possible with Expert Advisors because it can take over the control of your trading account according to the commands that you have placed on it. This particular type of EA usually checks your account balance first before it chooses the percentage of the balance that will be put at risk. In Forex trading, it is not advisable to take more than 1-2% of your trading balance on each trade. Fortunately, you can enjoy all these advantages of EA using your favorite trading platform MetaTrader 5. This trading platform is favored by a lot of traders because of its easy user interface and great features for trading.