The Forex Expert Advisor is a program which can perform certain actions following the instructions of a Forex trader, without any direct intervention. The program allows performing all tasks automatically or mechanically. For this reason, the advisors are called experts or mechanical trading systems.
It is also a kind of program that sends applications to a broker without any involvement of the trader. Since the program includes all the calculations, the trader does not need to have extensive knowledge of fundamental and technical analysis. Using some of the best forex expert advisors is advantageous in many ways. With the such an advisor that is fully automated, it is possible to succeed in trading. Here are some tips which can help traders succeed.
- Choose the Right Entry and Exit Points
Perhaps, it is a big mistake by traders, to stop using EA suddenly which can cause missing some good profits later. They buy EA observing a great live performance for the previous 3-12 months. They often set a risk higher than the recommendation by the author of the EA. However, you should avoid doing own backtests and start trading with the EA on a live account. It is also advisable to search for one of the top EAs and wait for using it until the next drawdown.
- Evade High-Risk Trading Strategies
Several new traders look for strategies that show live results. However, such strategies often use grid or martingale methods and the risk gets higher step by step. Remember that if the trend is stronger, the drawdown will be higher as well. It is recommended to use a strategy that uses a fixed stop loss procedure per trade. With such a strategy, you can protect your account and will make profitable trading in the long term.
- Keep Practical Expectations
Several strategies promise over 15% and often up to 50% gain per month. It may work sometimes for a few months. However, after analyzing the failure of a number of such guaranteed profit systems in the past 10 years, it is suggested by the professionals to start with having more practical expectations. Practically, you can expect values like 1-6% per month with a maximum drawdown of 5-40\%. In addition to the use of a strategy with strict risk management, you need to start trading with a low risk set up.
- Let EA Perform Its Task
One of the most common mistakes new traders make is to stop using EA too early. Usually, they stop trading with EA, once the first losing trades appear. However, as a trader, you must know that every trading system has a drawdown and you should not stop an EA suddenly. Instead of stopping, you should check the maximum possible drawdown set on the risk settings and whether it has reached the level.
- Select A Good Broker
Brokers sometimes charge high trading costs, which makes it difficult for strategies like scalper to have more profit in the long term. So, you need to consider the trading cost along with choosing a good broker.
- Eliminate Unrealistic Backtests
There are many ways to avoid unrealistic backtests. The most important part is to consider the spread. Usually, spreads stay stable and do not widen drastically. Besides, it is essential to use high-quality backtest data. Brokers often give data with huge gaps that lead to wrong backtest results. Also, it is recommended to test EA for a longer time.
- Conduct Own Research
Thousands of EAs are available for trading. Traders can find websites that provide lists of the best or top expert advisors. They can download the EAs enlisted on those websites and backtest each EA themselves.
- Prepare A Portfolio
In Forex trading, variety is the key to success. Traders should not stick to a single strategy. Remember, every strategy has a drawdown phase. A trader can overcome the loss while having another strategy that may make drawdown phase shorter and provides a stable portfolio performance.
- Do Not Go for Over-optimized Backtest
Over-optimized backtests lead to the wrong conclusion. Over-optimization may happen in some rare cases when EA sellers put some code into EA to avoid trading on bad past days to produce better backtest results.
Before selecting an EA, it is recommended to perform own backtest. In the next step, you should test the EA on a demo account or a small real live account.