Easing yourself into automation, on the MetaTrader 4 platform
There are times when us analysts and economists sound like broken records, so apologies in advance if this is one of those times. Whenever questioned with regards to the major improvements retail traders can make, in as short as time as possible, many of us will suggest; “do you use MetaTrader 4, if not why not and why haven’t you thought about automation?”
It’s never meant to be an abrupt, or hostile suggestion, however, when you’re promoting the services of STP/ECN brokers, we analysts tend to have inbuilt biases; we need our clients to be successful and in as short a time possible, if not then we don’t prosper.
We don’t profit through clients’ losing money, we need as many regular winning clients as possible, therefore we tend to offer advice that will, not only get our clients up to speed as soon as possible, but also steer you away from making many of the mistakes we made, on our journey towards seeing the light of trader enlightenment.
We’ve often referenced the early days of trading spot FX on the Internet and how it felt more like a spot the ball competition from a bygone era; spreads of 7 pips on EUR/USD. Fills when the lagging platforms woke up, stopped yawning and cranked into life. Your dial up internet connection of 0.5 megabytes per second suddenly dropping as you clicked buy or sell. Slippage (never in your favour) that felt like you were in a water park rapidly descending the highest slide. It’s enough to bring you out in a cold sweat when you recall what you were up against cutting your teeth, in this cruelest of unforgiving industries. How a few of us brave soldiers made it out alive is nothing short of miraculous. We were either blessed, masochistic, walked the tightrope gossamer thread of madness and genius with the gods protecting us, or a combination of all three.
What none of us had back in the early days, was a free platform that you could programme and automate to such a degree that quants at investment banks would be impressed. Quite frankly we’d have crawled through a desert for the fully functioning version of MetaTrader 4 you can now access. It went live in 2005 and proved an instant hit, due to individual users’ ability to code, using the MetaQuotes software language; MQL.
Now, despite its power and popularity, the vast majority of users fail to use the MT4 platform to its full potential, a good analogy would be buying a new MacBook Pro (with the funky emoji touch bar) and only using it to access: Instagram, Facebook, Twitter, Snapchat and to store your ten thousand selfies. So if you recognise yourself in that description and you only use the MT4 platform for basic manual trading, perhaps it’s time for you to take a few baby steps and begin to explore its full capabilities.
Unless you’re a committed manual day trader or scalper, then the chances are you can benefit by using automation in your trading method. Even if you’re a scalper or day trader you can still benefit by perhaps programming hard stops into your strategy, especially what we’d term “disaster stops”. One of the key areas novice and intermediate traders can benefit from automation, concerns eliminating impulse trading; decisions we may make which come outside of the scope of our plan, but we take on the basis of a hunch. Arguably, this is the key (and first) reason why retail traders should begin to master the features and benefits of MetaTrader 4.
Impulse trading, revenge trading, knee jerk trading, hunch trading, whatever the definition or term, these aberrations cannot form part of a professional’s disciplined trading plan. Despite no two moments in the market being the same and every moment being unique, history doesn’t repeat, but it does rhyme. Therefore successful, disciplined traders will learn that they place a market order, only when their confluence of conditions have been met and they repeat that process time after time, until they’re satisfied that their method requires slight modification.
For example, a simple trading method to begin programming into MT4 might be based on two (or three) indicators lining up, or two moving average lines crossing, or price reaching R1, S2, or crossing other trend lines, to trigger an order. You might consider programming the platform to hedge, only take orders when spreads are at certain quotes, or to use slippage filters. Even engaging in this level of detail, you’re only scratching at the surface of the MetaQuotes platform’s capability, but these simple actions represent an excellent place to begin experimentation.