Expert Advisors

Expert Advisors (EA), also known as Forex Robot, is a piece of simple software run on any computer. The program is coded with the strategy and integrated with MetaTrader trading platform which is connected to your Forex broker. With this, you can place trade manually, see live feeds of currency prices, demo trade & perform other trading activities.

Since Forex robot has built-in strategy, you do not have to learn the strategies the hard way. This ruled based strategy have been backtested for a specific period of time to verify that they would produce profit. Such a mechanical system can be either indicator based, price based or both of them. In short, all Forex robots are 100% mechanical system integrated with MetaTrader. MetaTrader read the rules and automatically and place trade for you.

That’s mean anyone with a Internet connection and a computer can use the robot. Any Forex broker that supports MetaTrader 4 charting software is all that is needed. No formal training or knowledge of the Forex market is needed or required.

What you need to do is install the Forex Robot on your computer and hook up to the Internet. This is like the Forex master doing your trading for you.

Here are the 4 Main Criteria that Make a Good Forex Robot:

1. Backtested

Most vendors will sell you their Forex robot based on successful backtesting. Backtesting is important as it shows us that the robot can potentially profit on live trading. However, you shouldn’t just focus on backtested result and it does not guarantee a successful forward trading.

Why? Because the backtester can ignore market conditions. In live trading, you might see the gap in price during a news announcement and market spikes. You may also see the big spread between bid and ask prices of the currency pairs which may affect your trade due to excess slippage.

2. Forward Live Trading

The obsolute best proof is live trading. Not many robot vendor use live trading to support their claim that their robot is the real thing. By looking at the live trading account, you can see how accurately is the backtested report of that robot.

3. Money Management

No matter how well a Forex robot seems to be live trading or backtesting, we can never know what the future result will be. Hence, we must employ adequate safeguards – sound money management rules. This is the KEY to successful LONG TERM wealth building via Forex trading.

4. Low Drawdown

Drawdown represents the total percentage loss experienced by a strategy before it starts winning again… and drives the investment balance back up.

Taking drawdown into consideration, you can judge just how risky these automated strategies are. You will see some out there that have a 40% or even higher drawdown in their reports. With those kinds of odds, you better have one heck of a strategy to back up that high of a risk level.

A good robot should be below 15% drawdown, which means you have an expert advisor backed by a rock solid strategy that would take an absolute miracle to bankrupt an account.

These are the 4 important criteria you should focus on when making your decision for the Forex robot.

Besides, a reliable internet connection is another important factor you should take note for the robot to work properly. If you are having many trades, you may want to consider to host your robot on Virtual Dedicated Server. This means that the robot is trading from a hosted service instead of your computer.