MetaTrader Expert Advisors - The Benefits of Forex EA Trading

Discover why so many professional traders are building their own Expert Advisors

Welcome to the world of creating automated Forex trading systems using Metatrader Expert Advisors. 2018 has largely been the year of Artificial Intelligence and algorithmic trading.

In fact, Bill Gates mentioned the following on Twitter earlier this year.

So, you might be wondering, what is involved with creating your own Expert Advisors to seamlessly execute your trades into the market 24 hours a day, 5 days a week?

Before we dive into that, it is interesting to note how active the institutional trading desks are in using algorithmic systems to execute their trades into the market.

According to a Greenwich Associates study, the proportion of spot FX traded algorithmically by corporates shot up to 28% in 2016, from only 10% in 2015. Recent reports suggest that figure is now at 30%.

What is a Forex Expert Advisor?

You have no doubt heard the term Expert Advisor brandied around on trading forums around the world. They are becoming more and more popular for several key reasons. Before we get into the benefits of automated trading with your own Metatrader expert advisor, let’s discuss what they are.

An Expert Advisor (EA) is a process in which you code your complete trading system into the computer in order for it to be executed on your behalf.

What can be coded into your trading EAs?

Basically, every component of your trading system can be coded into your Metatrader expert advisor.

This means you will need to identify your:

  • Entry criteria
  • In profit exit criteria (including trailing stops)
  • In loss exit criteria
  • Position sizing rules
  • Money management rules
  • Breakeven rules

As you can appreciate, this is well suited to those who have created or are in the process of creating mechanical trading systems.

Mechanical systems have precise entry, exit and position sizing rules with no grey areas.

The other alternative is a discretionary trading system. A discretionary system can have grey areas, which are essentially rules or trading ideas that cannot be automatically executed by a computer.

An example of a mechanical trading system or simple expert advisor system would be to buy 1 lot of the EURUSD forex pair if the 5-period moving average crosses up through the 20-period moving average and close the trade when the 5-period moving average crosses back below the 20-period moving average.

An example of a discretionary system is where you might decide to buy double your normal position size because volatility is low across the markets you are trading. This meant you had to manually look at the relevant markets to see it met your criteria and then decide if you should place a normal size trade or more based on the volatility.

Automating your trading

The benefit of creating your own trading robot is so all the order placing can be executed by your computer. You no longer must be there entering in every buy and sell order or adjusting your stop loss as the market moves higher.

Every single aspect of your system can be coded in. And the good part is the EAs operation removes the emotional aspect us humans have when faced with the fear of placing trades.

The MQL4 language is built by the Metaquotes software corp, who build the MT4 and MT5 trading platforms. And it is for this reason the MT4 platform has become one of the most dominant Forex platforms in the market today. You can download Metatrader here.

What programming language is used?

The Metatrader trading platform uses the MQL4 programming language, which is an object-oriented programming language. Many suggest the language used is closest to the C and C++ programming language.

The basics of creating a trading edge in the markets

You can already see the global FX institutions are using the programming tools to automate their trades into the market.

One of the reasons for this is they have a number of Quants who can identify positive expectancy trading ideas and back-test them quickly. You can use the strategy tester within MT4 to test your own systems using historical information too.

Once the back-test results prove there is an edge, it needs to be executed into the market. Now imagine if you had 5-10 of these positive expectancy trading systems. You may be completely overwhelmed when many entry or exit signals trigger at once.

So, they get coded into their respective trading software such as MT4 so they never miss a signal.

Top 5 benefits of using a Forex trading robot to execute your trades

  • You can focus on creating positive expectancy trading systems.
  • Computers are much faster at responding to alerts than humans.
  • Never miss a trading signal. Your EA never sleeps.
  • You no longer have to be glued to your computer screen.

    As traders, humans have a number of behavioural biases which lead to mistakes. When it comes to trading, those mistakes can mean thousands of dollars.

    Therefore, it goes without saying that if you have a tendency to override your own trading signals or miss signals for various discretionary reasons, building your own Expert Advisors might be the best thing for you.

  • Remove the emotional element of entering or exiting the market.

What types of automated Forex trading strategies can you create?

As you can appreciate, you are only limited by your creativity, knowledge of the markets and ability to code.

But even then, there are forums you can access to hire a MT4 programmer to build you trading system and ideas into an EA.

Here are some types of trading styles to get your mind thinking:

  • Creating an EA to trade news releases. You can view the Forex calendar here to see all the major events coming up.

  • A moving average cross over system or MA cross (as mentioned above). Nearly every trader starts with this style of basic trading strategy.

  • For those active traders, you could build a scalper EA where you scalp the market for small gains.

  • Any form of technical analysis such as overbought/oversold indicators (i.e. stochastic oscillator), wave analysis or any combination of technical indicators.

  • You can build your own custom indicators and include them in your EA.

  • Chart pattern based EAs such as ascending triangles (although many argue this style of trading is best left to discretionary traders)

  • Breakout expert advisors

  • Pairs trading expert advisors. Pairs trading is where you will go long one instrument such as the Dax index and short the S&P500 index based on markets getting out of correlation.

You will need a Forex Virtual Private Server (VPS)

Forex EAs are executed via your Forex broker on your live trading account. But the signals are kept on your local machine and do not sit on your brokers servers.

Therefore, you will either need to have your PC on 24/5 or you can do what nearly every other automated Forex trader does and that is utilise the best Forex VPS service available.

Automated Forex traders need connectivity and reliability. And it is for this reason that professionals do not rely on their home PC setup.

You are best off using a Forex VPS service to execute your automated Forex trading systems. Do not compromise on this. Missed trades or missed stops can cost you thousands of dollars. So be sure to use a VPS service that has outstanding uptime and reliability.

Getting started with your own Expert Advisor

You may be asking, ‘Is automated forex trading for beginners or solely for professional traders?’.

The truth is, everyone starts at the beginning. So even if you are new to trading, getting to know and start the process of building your own Expert Advisors is key.

One thing is for sure. Professional traders and fund managers have been using automated trading models more and more frequently.

So now is the time for you to get started no matter your level of experience.

The way most get started is setting up a demo account and then testing their EA live there. Once you are comfortable with the results, you can upgrade to a real live account.

Have you tried the Synergy FX Expert Advisor?

The team at Synergy have been developing Expert Advisors since MT4 was available. Every Synergy client receives the Synergy FX expert advisor Toolkit to help you achieve your trading goals.

The expert advisors we have selected for you have been handpicked by our team of trading experts to give you the best opportunities in the market.

Our flagship expert advisor trading tool is called Ichi Scalper.

In order to start trading using Ichi Scalper you will need a live trading account. Click the links below to get started.

Or give the team a call today on +61 2 8274 2600 and we can discuss how you can automate your trading strategies using your very own Expert Advisors.