Expert Advisors for MetaTrader 4 & 5 allow traders to automatically trade the Forex markets using a predefined trading strategy and are immensely popular among traders. In certain regions such as China automated trading programs such as Expert Advisors account for the majority of retail trading volume. While it is possible to write your own Expert Advisors in either the M4QL or M5QL languages, however many traders do not have the necessary coding experience to write or program their own Expert Advisors. This has led to there being a huge market in people selling what are known as commercial Expert Advisors. Many people have mixed feelings about these for sale commercial Expert Advisors and in this article we are going to take a look at the pros and cons of using a commercial Expert Advisor to trade the Forex markets.
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Commercial Expert Advisors: The Pros
Straight out of the box
Any of you who have looked into writing an Expert Advisor by hand will probably have realised just what a daunting task it can be. The situation is considerably worse for those who don’t have experiencing with coding and would have to spend a considerable amount of time learning the M4QL or M5QL language before they could even start work on an Expert Advisor. Purchasing an EA from a commercial vendor saves you all this hassle and makes it possible to start trading the FX markets almost instantously.
Huge Variety of Trading Strategies
When browsing for an Expert Advisor to purchase you will probably have noticed that there are a huge range of EA’s out there. These Expert Advisors use a huge range of different trading strategies and you will be able to find yourself programs which scalp the markets and other bots that take a much longer term view. This means if a trader favours a particular trading strategy they can probably find an Expert Advisor that suits their preferences.
Human emotion can affect your trading significantly and some traders let psychology override their trading decisions ultimately costing them money. Using an Expert Advisor to trade the markets removes the role of human emotion, one simply has to place their trust in the program to perform as advertised and let it do its thing.
Make Trading Profits Automatically
One of the biggest selling points of Expert Advisors is that they potentially allow traders to make profits automatically without having to trade themselves. This makes commercial Expert Advisors particularly compelling to newer traders who don’t have the experience or confidence to trade the markets themselves.
Commercial Expert Advisors: The Cons
Black Box Systems
The vast majority of commercial Expert Advisors are essentially black box systems meaning that traders are unable to see the inner workings of the trading system. If traders did have this kind of access to the inner workings of an Expert Advisor they would be able to replicate the system for themselves and make money selling it themselves. When using an Expert Advisor you are using a system where the internal workings of system are unclear at best and this involves a certain leap of faith. With EA’s being a black box system it can also be hard to determine in what market conditions the bot will stop working meaning many carry on using an EA beyond its shelf life.
When you come across websites advertising Expert Advisors you will often find them quoting impressive backtest results. These backtest results need to be taken with a pinch of salt, as often Expert Advisors have been optimized to produce very impressive results over historical data. This often means that these Advisors are unable to produce the same kind of impressive results going forward, due to market conditions constantly changing. How an Expert Advisor has done over the past is no indication of how it will perform in the future.
Trial and Error
While people have found considerable success using particular Expert Advisors, there are a huge number of different EA’s on the market all making bold claims about their performance. It can often be difficult to differentiate between the systems which are worth trying and those which are simply money down the drain. Many who have tried out commercial EA’s have lost significant amounts of money in the process, which is something traders should be aware of.
Expert Advisors are hugely popular among traders and there are a huge number of providers selling these EA’s to traders. While there have been a number of success stories, traders should be aware of the risks involved in using a black box system they don’t truly understand. As with everything related to Forex traders should advance with considerable caution when it comes to the purchase and use of Expert Advisors.