Unless you’ve been living on the moon, you’ll probably have heard of robots here on earth that can carry out a trading strategy without human intervention.

These robots, called “expert advisors”, live within the trading platform and feed on algorithms that tell it when to open, close and modify trades based on a given set of rules.

If you’re an investor in stocks, forex, CFDs, or pretty much any market, there are many reasons why trading robots may be of interest to you.

What is an Expert Advisor or “EA”?

Simply put, an EA is a programme that you install on MT4 or MT5 that will automatically follow the rules you have for your trading strategy.

EAs can run on any machine without the need for you to be on or near your platform and will execute your strategy without your input.

What are the advantages of using an EA?

#1 Don’t stress
As experienced traders will know, getting to grips with the market can be a thrilling, but maddening endeavor. 

The emotions of greed, fear, elation, and frustration can simply overwhelm many traders to the point where they are no longer capable of taking the most important decision in trading – stick to your plan.

EAs are a great way of getting around this issue of yourself. They coldly and impartially execute a trade on your behalf, without thinking about losses or how to spend the next profitable trade. 

That means you can simply sit back and judge the performance of your strategy from time to time, and optimise a little here and there, without the dangers of involving yourself in every tick of every trade.

#2 The market never sleeps
Another common reason for using EAs is to carry out trades while you’re away. 

The forex market is a 24-hour market for most of the week, and an EA can carry out trades in your absence, while you’re sleeping, at work, or simply taking a break from your screens.

#3 Computational power
In most cases, a robot taking your job is probably not your greatest hope in life.

With trading, however, there’s a little more sense in ditching that name tag and taking a backseat as the droids take over.

A robot can compute many more indicators and scenarios in a second than you are in minutes or hours, for any market you’re interested in trading at once.

That means if you have an involved trading strategy that takes many factors into account, your EA can execute in a second what you’ll be thinking about for much longer.

That can mean more precise entries and exits, and better overall adherence to your plan.

Disadvantages of using an EA

There’s a single, clear disadvantage of using an EA.

The robots are not able to respond to real-time news and or take new decisions based on breaking or developing stories.

A clear stop-loss should avoid the worst end of something going wrong with the fundamentals of your trade, however. And knowing dates for expected news releases in advance will help you avoid switching on your EA during the time if you’re uncertain.

Just don’t expect your algorithm to switch on Bloomberg just as Donald Trump and Shinzo Abe settle in for the G7 press conference.

Where can I find EAs?

There are many EAs offered for free on various trading forums and sale through various providers. You can also create one yourself if you’re familiar with the Metaquotes programming languages.

Just don’t be fooled by providers guaranteeing astronomical returns if you buy their EA.

There are no guarantees in trading, not even in the binary world of trading algorithms.

But there are helpful trading robots that can help you execute an interesting trading strategy if that’s what you’re looking for.

And while at TIOmarkets we can’t recommend one EA over another, we can offer you excellent trading conditions on which your robot can run, as well as some of the lowest trading costs you’ll ever find.  Register here to trade with a fully licensed and regulated broker.

*66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Dalia Hilmi
Author

3 Comments

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  2. Avatar

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