In the world of forex trading, a forex robot or 'expert advisor' is a program which traders install onto their trading platform in order to execute trades automatically.
These robots use computer algorithms based on a pre-set signal criteria that help determine the best price in which you should buy or sell a currency pair.
In this article, we will discuss exactly what a forex trading robot is, what to consider when looking for one and the advantages and disadvantages of using a robot to help you trade forex.
A forex trading robot - also known as an expert advisor - is a trading program designed to help traders by generating signals when to buy or sell a specific currency pair. These programs are fully automated.
MetaTrader remains the most popular trading software for traders and most EAs were built using the MQL scripting language. Over time, a vast number of EAs have been built for MT4.
One of the benefits of using a forex robot is removing the trading psychology out of the equation which is sometimes detrimental to a trader's performance. While the thought of an automated computer program telling you when to enter or exit trades sounds like it could be beneficial to your profits, it is not a foolproof strategy and caution is always advised.
EAs are widely used in the forex trading community. Some traders exclusively use EAs and choose not to engage in discretionary trading. Others might choose to diversify and use EAs along with their manual trading strategies. Whether using EAs in general is the right fit for you or not depends on your personality as trader. If you struggle to make decisions and feel overwhelmed by your emotions when trading, it might be worth trying out expert advisors.
On the other hand, if it is important for you to be fully in control, you may find yourself second-guessing the EAs frequently and not feeling comfortable with using them for a longer period of time.
A demo account can be of great help here, as it allows you to test the EAs in a risk-free environment. Beginners often focus on finding the best forex robots, but there are no trading systems that are perfect, and even profitable forex bots can stop working abruptly if market conditions change.
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There is no 'holy grail' system when forex trading, regardless of whether we are talking about manual or automated trading. When considering automated trading, the first question you should ask yourself as a trader is whether you want to develop your own forex trading robot or purchase one of the many that are available on the market.
If you decide to purchase an automated trading system, you shouldn't let yourself be easily impressed by those profitable trades and the high success rate.
You can carry out a background check - by reading the reviews from other users and check if there are any posts in trading forums or on social media. While you should't rely purely on this, it will be helpful to learn about the experience other traders had with a particular expert advisor before purchasing.
Furthermore, you should conduct your own test. Many EA providers offer trial versions and you could utilise the strategy tester tool within MT4. When analysing the stats, it is important to look beyond the obvious and also consider the profit factor, maximum drawdown and the risk-reward ratio.
MQL4 and MQL5 are programming languages used to develop trading robots, custom indicators and scripts for the MT4 and MT5 platforms. It is supported by MetaQuotes, and there is a large community of developers sharing EAs on their forums.
The first step to creating your own EA from scratch is to learn the MQL programming language. While it might seem overwhelming at first, the good news is that there are plenty of free resources available online which will enable you to learn coding EAs within a reasonable timeframe.
After you developed your own system, you should spend time backtesting it and running it in a demo environment before going live with it. Most likely, you will discover that it will need some adjustment before being applied in a live environment.
The benefit of developing your own EA is that you can understand the logic behind it much better and you can make the necessary adjustments when needed.
For more information on building your own EA, check out this guide on Creating a ready-made Expert Advisor.
Follow the steps below to start using a forex robot in your trading strategy.
Steps to install forex trading robot in MetaTrader 4
1. Create or download the EA.
2. Select and copy the EA file.
3. Locate the 'MetaTrader 4' folder under 'Program Files' and insert the file into the 'experts' folder.
4. Open the MT4 platform
5. Find the 'Navigator' box on the left side of the platform. There will be an option that says 'Expert Advisor' - click on the Plus sign.
6. A pop-up box will show you the settings of the EA.
7. Once checked, click on 'OK' to enable it.
While it is legal to use forex trading robots in most countries, traders need to conduct their own due diligence as no system is perfect and forex trading is risky - whether you trade currencies manually or with the help of an expert advisor.
Discover the advantages of using forex robots in your trading plan:
We've covered the advantages above, now review some of the disadvantages of using a forex robot to trade:
In MetaTrader 4, you will find an option called "Market" within your terminal. This is a marketplace for trading robots, indicators and trading applications. Below is a screenshot that shows how to find the marketplace.
Go to the MetaTrader 4 to learn more about automated trading.
Start testing your EAs on a demo trading account before signing up to Axi with a live trading account.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
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