What is an Expert Advisor?
An Expert Advisor is a computer program designed to automate forex trading. The forex market is open anywhere in the world 24 hours a day, 7 days a week. You can use the Expert Advisor or a trading tool called a “forex robot” to execute trades on your behalf while you are away.
Advantages of Expert Advisors
If you tend to trade when emotions take over, the Expert Advisor removes this factor from your trading. By using the Expert Advisor, your fears and desire to make more profits won’t affect your choices when responding to trading signals; the Expert Advisor will execute trades based on your inputs. It has no fear of loss or profit-making mentality; it simply makes trades on your behalf.
If forex trading is your main source of income, using an Expert Advisor can reduce stress levels, as it removes the mental pressure of trading. You can set your trades for the day and move on to other tasks or efforts.
Disadvantages of Expert Advisors
One issue you may face with the Expert Advisor is that it cannot respond to immediate news. It ignores factors that cannot be programmed into it. If you are in your office monitoring the news, you can avoid making a trading mistake after news releases. However, the Expert Advisor won’t care about an interest rate decision set to be published in one hour; it will continue trading (or not) if set to do so.
Although the Expert Advisor can handle more variables than you can at the same time, it can only operate in the way you have set it up. You are not rigid in your thinking, so you can respond to matters that go beyond the parameters you have set. There may also be times when you need to intervene to avoid a major trading mistake or to seize an opportunity.
Testing and Research
Whether you are using someone else’s Expert Advisor or creating your own, it is essential to test it on different time frames in a demo account. A demo account does not put real money at risk and allows you to see how it works for you. You may find it works well for you in some currency pairs but not in others.
If you are using an Expert Advisor you programmed, be prepared to adjust the variables from time to time. With changes in market trends, your program may need to adapt along with them.
If you are using an Expert Advisor from another company or individual, remember that the currency market is not highly regulated, making it a natural place for scammers to operate. Beware of Expert Advisor creators who promise exaggerated high returns. Understand that some scammers know that exaggerated promises are a red flag, and a provider of an Expert Advisor trying to find a balance between hope and credibility may also be a scammer.
Above all, do the necessary research before committing to any single Expert Advisor, and keep your expectations realistic. There are some good Expert Advisors out there, and some traders make annual gains using an Expert Advisor or a robot that trades automatically. However, their annual returns are usually in the high single-digit or low double-digit percentages at best.
Frequently Asked Questions (FAQs)
How can an indicator be turned into an Expert Advisor?
You cannot directly convert an indicator into an Expert Advisor, but you can build an Expert Advisor based on an indicator you use in your trading strategies. You will need to program the indicator strategy into the Expert Advisor software, but you can rely on another Expert Advisor that you purchase or find online.
Why does a sad face appear when applying the Expert Advisor?
It may…
Some forex programs display a grim or sad face when you add an expert advisor. This may indicate a problem with the expert advisor you applied. Check if you have enabled auto trading on your forex program and whether there are any errors in the expert advisor code.
Source: https://www.thebalancemoney.com/what-is-an-expert-advisor-1344951
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