About Robots/Expert Advisors

This thread is intended for newbie traders who start their forex adventure dreaming of making a fortune riding robots before even getting a driving license.

What are Expert Advisors or Trading Robots

Expert Advisors (EAs) or Trading Robots are programs that allow automation of the analytical and trading processes on a trading platform.
They automatically places and closes trades for you using pure mechanical rules.

These robots are programmed using the programming language(s) offered/supported by the trading platform, such as MQL4 for MetaTrader4, MQL5 for MetaTrader5, cAlgo for cTrader, NinjaScript for NinjaTrader. These robots are supposed to generate returns by the application of a trading strategy decided by their creators. The commands executed by the robot are based on the tools of technical analysis.

Our focus and examples in this thread will be based on MT4 as the most popular trading platform among retail traders.

Types of Expert Advisors

 

1. Advise-Only Expert Advisors :

These EAs behave as indicators, and provide signals without opening/closing trades, and may allow traders to open/close trades using them, such as dashboard EAs.

1. Specif-Task Expert Advisors :

These EAs do only a specif job, like closing trades after reaching certain profit or loss, or opening orders at specific time ... etc.

1. Full Trading Expert Advisors :

These EAs are supposed to do everything for the trader, opening/closing, position sizing, money management ... etc.

Forex automatic trading using a robot is an alluring, great idea that promises a lot, but mostly delivers little, if any.

The success of a specif robot is affected by three main factors:

1- The Trading Strategy
2- The Coding Quality
3- The Trader

hehehe, Perfect..brother Abo.....
for full auto I am still learning in terms of coding, and understand the scenario that will appear on the real market .....

you have been long in the making scenario to full auto ....
interesting to study full auto, while I was still working with the manual ....
hihihihi .....

Thanks dd,

Actually this thread will not be about teaching on how to develop full auto robots.
It will be about how robots are only tools, when used unwisely, or being in wrong hands, it may kill you.

From my experience on this forum, I noticed that newbies (joined FF recently) are the most attracted category to trade using robots.
In my opinion Auto Trading should be a very Advanced level of trading.

I mean, the trader should pass several levels before trying auto trading:

1. Good understanding of the forex market (there are many books about the subject)
2. Full understanding of the Trading Platform
3. At least a 1000 hours of charting screen time
4. A good level of understanding of Price Action, primary indicators, position sizing, money management, margin, leverage
5. Manual trading of different strategies ( at least a month/30 trades on each strategy)

Auto trading could be a solution for few issues a trader may experience, but will never be the holy grail of trading.

Thanks for the information, brother.
Personally, I'm still wondering to use EA but at the other side I'm still learning how to trade well in forex. Unless If I have an ability to program it, I could make EA with my own trading system...

You are right.
But it is in human nature - be willing everything right now and right here.
And robots seems like the easiest way to go.

Hi LuthfiMaung and Laslo,

Lets think of the "Trading Strategy" as the "Vehicle or CAR", example : BMW i8, Kia Picanto



In manual trading : You are the Driver !

In Auto Trading : You, or some one else will build an Auto Driver (comparable to Auto Pilot in planes) for you to Driver Your Car. AND in this case you will be the Controller.

Different cars have different capabilities, safety features, speed, power, mileage, capacity.

So WHY to use an Auto Driver in the first place ?

 

1. You don't know how to drive at all, or you don't know your car, or you don't know how to drive your car. But how can you become the Controller if you don't know or you can't drive your car. So first you need to learn how to driver in general, AND to know you car and to learn how to driver your car in specific.
2. You know your car and you know how to drive it, but you don't trust yourself (i.e. exceed speed limit, drive into rough roads, sudden breaks ...). But again in this case you can not act as a Controller.
3. You know how to drive, and you trust yourself, BUT, you don't have the time for it, (i.e. you have more important/pleasant things to do, you don't have the energy, need to eat, sleep ... etc).

In my opinion The third case is the only legitimate reason for using a robot to auto trade your strategy on behalf of you.
And still, you will need to check every now and then how the robot is doing, and assess/tweak if required.

The only way a robot works is when the trading method is 100% mechanical AND someone has clearly defined the rules for entry. By that I mean there can be zero discretionary values used in the trading. "When this AND this happens, go long" etc. Not "Sometimes when this and this happens you go long other times you go short."

Problem is that most people THINK they have a good system when in reality they are only seeing the good in it and not the negative. Without analyzing both you will almost always fail with a robot.

Are there profitable robots trading forex? Yes. However, it is very unlikely that you will find the best on a free web site or even on "sale" for 1499.00. LOL! Ask yourself this question, knowing how profitable FOREX can be, if the robot was truly revolutionary then why would you sell it? God himself would need two forms of ID and sign a non-disclosure and non-compete release to see my robots in action.

Do not be fooled into thinking that a robot will ease your worries. In fact, in most cases you will find that you are more nervous with a computer in charge of your account than when you trade yourself. I have seen cases where the robot was improperly coded and during the night an unplanned situation in price happened and the robot opened and closed 800+ trades during the night. All in the same direction, open on one tick close on the next. Multiply that by the spread and commission and you will realize the nightmare this person had on their hands.

When coded properly even if you do not use it for live trading, they are wonderful ways of validating your trading system. They can give a boost in confidence for your trading or wake you up to the realities of FOREX.

Example Uses of Expert Advisors : Back/Forward Testing a Trading Strategy or Idea

We all might think of a trading idea and almost believe that it will be a winner, or we might read a bout a trading system in a book or a forum and think that this is the one, and like to give it a try.

EAs give us the opportunity and save a lot of time testing such trading systems/ideas and might even improve them, before committing to it.

However, back testing a trading system is a scientific process. We need to follow certain procedures in order to avoid curve fitting the inputs.

Thank you for your response, Brother Abo ...
Yup, before becoming a full auto I am more interested in a concept ...

I still like to do it manually, I am aware of the skill or knowledge of me still a little ....
planning for full auto is always there in my mind, but not to the present or the near future ....