Expert Advisors are mostly used in MetaTrader 4 (MT4) and MetaTrader 5 (MT5). There are a lot of advantages of using EA in Forex trading but there are also risks that you need to deal with. You can either create your unique EA or use the ones provided by your trading platform.
Advantages of Expert Advisors
Since the Forex market is open 24/7, there are a lot of opportunities that come and go. Every second count. But you cannot sit in front of the computer the entire day waiting for this opportunity to come. Using an Expert Advisor, you can still carry out trades even though you are away from your computer. You won’t miss any opportunities whether you are working on your corporate job, asleep, or anything else in between.
More importantly, EAs are very effective in removing the emotional factor that humans tend to experience when trading. Emotions like greed and fear are two of the most common emotions of traders. Although these emotions are common, it doesn’t mean that they won’t affect your trades. Such emotions cloud your decisions. It affects your trading strategy. EAs only act according to the instructions that the trader has put in. The set of instructions should be based on your trading strategy and everything should according to your plan.
There are traders who are trading to generate income or it is their main source of income. This is tough especially if you experience a string of losses. But when you trade using EA, you can avoid emotional trading decisions. Additionally, EAs also known as Forex robots are able to consider more variables altogether instead of wrapping it all on your head. You can trade on different currency pairs all at the same time, something you cannot do when you trade manually. As you already know, automation is really good nowadays.
Disadvantages of Expert Advisors
If there are advantages, there are also disadvantages of EAs. But knowing these disadvantages allows you to control its possible effects and take action to avoid huge losses on your part.
Unfortunately, you cannot respond to real-time news with EAs. This may hinder you from being updated with the current news in the financial world. If you are personally monitoring the news on your computer, you can somehow avoid such mistakes.
Another disadvantage of EAs is that they only act according to what is programmed to them. It is true that EAs have the ability to deal with more than one variable and trade more currencies at the same time, but the system only does what it is programmed to do. That being said, no matter how magnificent your EA is, that software will have no match to human brains. After all, humans were the ones who created it and it will only perform instructions which are programmed to them. As much as possible, always keep track of the performance of your EA. Assess it whether it is still in line with your trading plans as well as your trading logic. Good thing EAs are available in MT4, the most user-friendly trading platform for beginners.