What is a Trading Advisor (Expert Advisor)?
An Expert Advisor, or also abbreviated as an EA, is an automated program for trading on Forex. The program is a reflection of a certain trading strategy. The Expert Advisor can analyze current market condition, open and close trades and move stop orders. Basically, an Expert advisor can perform any action a trader may need to do for profitable trading.
In order to make sure that advisor is trading profitably; you need to test it in the strategy tester. After you have analyzed advisor’s performance and profitability, it is recommended to install the robot on a demo account for some time. When analyzing the Expert advisor’s performance, pay attention to parameters as: profit factor, expected payoff, maximal and relative drawdown, consecutive wins and losses. After you’d installed a robot on a demo account, please take a look how your advisor is working in the real market conditions. If everything works well and your adviser makes profit, you can then switch to a real account.
Advantages of Automated Trading
Minimal trader involvement.
Possibility of combining manual and automated trading.
Trade risks reduction.
Possibility to test and use different trading strategies at the same time.
Allows trader to have enough time for developing and optimizing new trading strategies.
A way to implement a trading system that is difficult to apply in manual trading.
Disadvantages of Automated Trading
A small mistake can lead to deposit loss. Therefore, you need to be very careful when setting up an adviser on real account.
You need to have constant access to the Internet, experiences traders use dedicated server (VPS).
Expert advisors cannot track news; they use preset algorithms. Therefore, some robots can and should be periodically optimized, and some simply become obsolete and can no longer be used.