Expert Advisor - Why Most Of Them Failed And How To Identify The One That Truly An Expert

If "expert advisor" sounds strange in your ear

, you may have stumbled upon more "common" terms: automated trading software, forex robot, or simply EA (short for Expert Advisor). All of them are literally the same thing: an automated software that utilize your trading platform (usually a MetaTrader platform) to analyze the market for potential profit opportunity, manage opened positions, and execute orders automatically without human operator. On paper, this is very convenience since it can replace human trader to watch the market 24/5 so there is no potential profit missed.

Most expert advisor are written in MQL-4 programming language and designed to run under MetaTrader 4 trading platform. There are many version of them, some of them are programmed to alert you if there is trading opportunity arise (known as trading signals), the other can automated the whole process: watching the market, analyzing, adjusting stop-loss, trailing-stops, and take-profit. Not only that, it also can making entry and exit from the market by itself.

If you've been a fan of manual trading for a while and have your share of profits, I know that it sounds too good to be true. Offering cheap software that can outsmart you in trading forex is sounds like most of scammer will do anyway. Well, there is truth in that way of thinking; over the years, there are many investors lose their money because they trusted their fund to be managed by an EA. It happens because more than half of the EAs in the market are mere trash that can only win against past data but keep getting loss trades against real market. This is the facts and it still happening now.

"I knew it" is probably what you think now, but there's another side of the coin that you must know too. It is purely logical thinking and not rocket science at all, so bear with me for another 2 minutes.

If you've been trading for a while you must have known that every successful trader have their own trading system that can works without fail in their area of expertise; maybe swing trade strategy on USD-JPY currency pair, maybe long-term 3-7 days strategy on GBP-USD, maybe intraday scalping method on EUR-USD, or maybe they have a few set of strategies for different market condition. Nevertheless, all of them following a set of rules while trading and they gain steady profits by follow it with strict discipline.

I'm sure you've got the picture now. All the EAs are just a bunch of codes that executing what they've programmed for; to be exact, they're merely executing the rules behind them, these rules are what make them truly "expert" or truly "trash". When the rules are made by an experienced trader who has use the same rules to make a living from trade forex, the EA will mirroring the trader and become a real "expert"; on the other hand, if the rules are made by some programmers whose aim is only to match the program to win in backtest, the EA become real "trash".

How to differentiate them? The method is simple; just open a dummy account, place your EA there (you still have to spend some money on VPS though), and test it for at least a month, thus you can see if it is really profitable or not against live market movement. Most of them are "forced" to offer 60 days 100% money back guarantee due to the merchant rule, so you're safe to test it during that period.

Do not let those scammers make you lose potential profits from forex trading; it is true that more than half of the current EA at the market today are trash, but a few of them are really backed up by a real trading system that qualified to manage and grow your fund.

by: Matthew Johnson.

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