Expert Advisor (EA)
Traders and especially inexperienced new traders always were looking to find an automated way of making trades, a software that will be able to make all the work without have to lift a finger. An automated trading system which a trader can delegate work without having to sit in front of a computer 24 hours a day.
Automated trading systems are the Expert Advisors, so called EA, Automated Forex Trading Software and Forex Trading Robots, which are software programs that analyzes data, provides a trader with buy and sell recommendations, can perform orders following traders’ instructions and can manage all aspects of trading operations from sending orders to automatically adjust stop loss.
Forex Advisors are written in a specific programming language that allows traders to set instructions and program the system without any difficulty.
Expert advisors are all unique. They are algorithm in nature which means that they use rules in how to analyze data and recommend actions. A trader sets the strategy and the Expert Advisor finds trades, recommends and sends orders according the predefined strategy.
Expert Advisors have advantages and disadvantages.
One advantage of Expert Advisors is that they give traders freedom since they trade on behalf traders all day long without supervision as long as the traders set the rules and parameters of their strategy right.
Also, Expert Advisors, from a psychological point of view, they eliminate emotional trading decisions and allow traders to implement a strict strategy without falling outside the programmed parameters.
Another advantage of Expert Advisors is the fact that they can take dozens of different factors, a huge amount of data and process it very quickly in order to forecast and decide what to perform next. Speed is a very important option for an Expert Advisor.
Furthermore, is very useful for beginners having the basic knowledge of trading because it will come and cover them when trading. But at the same time this can be a disadvantage because, new beginners might use the Expert Advisor for the wrong purpose and think that is needless to understand anything about the market.
Last but not least, an Expert Advisor maximize the opportunities for traders compared to manually trading because can manage and monitor quite a big number of trading instruments.
But the Expert Advisor is still a mechanical system and the advantages of an Expert Advisor can turn into junk in the hand of an ignorant trader.
Expert Advisors have also disadvantages. One disadvantage is the fact that Expert Advisors are software and any manual intervention during trading might lead to the software malfunctioning.
What is more, disadvantage of Expert Advisors is the fact that they lack of information that is non-programmable therefore the forecasting from an Expert Advisor is based on pre defined parameters and not take into consideration political environment and economic news that might largely affect the market. The trader must always keep an eye on data on the broader economic view.
Also, on dates of high volatility, Expert Advisors might malfunction.
Not every Expert Advisor is profitable and not every Expert Advisor can perform well for all trading instruments. Testing is very useful.
Using Expert Advisor does not mean that traders should follow Expert Advisors blindly but also have their own system alongside Expert Advisors.