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How do Forex advisors work, and how to use them?

Mar 11 • Forex Trading Articles • 1247 Views • Comments Off on How do Forex advisors work, and how to use them?

Each Forex trading advisor contains a certain market strategy, a kind of response scenario to certain trading signals, an algorithm of behavior when buying or selling currencies. Here, a direct relationship comes to the fore: how good the strategy is, the EA is just as profitable. But advisors are applications for Forex trading systems, so an advisor’s profitability will depend not only on the experience of the trader who developed the strategy but also on the programmer who wrote it in close contact with the trader.

The best Forex advisors should be able to process huge amounts of data at lightning speed, submit requests for transactions without the participation of a trader, internet access, and even a computer without the slightest delay – speed, performance, and rigorous accuracy of work are the key criteria that characterize the quality of an expert advisor.

Also, nothing stands still, including the financial markets and research in technical analysis. Therefore, algorithms for tracking trading signals on Forex should be improved in trading robots. For this, the best and most profitable advisors are systematically updated online, adjusting to the changed market conditions.

Various trading advisors differ in the following technical indicators of trading:

  • – specialization on a certain currency pair (or several),
  • – a “timeframe” range
  • – work algorithms
  • – a technical analysis system
  • – a built-in strategy
  • – drawdown depth
  • – and risk level.

Also, expert advisors are automatic and semi-automatic. That is, they give the traders freedom of choice in certain situations.

Trading advisors are written in different programming environments, in different languages ​​, and for different trading systems. In terms of its popularity, the undoubted leader is the MetaTrader trading system of the fourth and fifth versions. Therefore, forex advisors are designed the most for MetaTrader. On the website of MetaTrader, even a page for developers of trading robots exists so that anyone can test, put up for sale or buy one or another expert advisor.

Despite the obvious advantages of automatic trading in the form of:

  • – Instant detection of trends,
  • – Analysis of inclined channels,
  • – Conducting transactions under certain conditions,
  • – Changes in TakeProfit or StopLoss orders,
  • – Technical indicators and analysis of support and resistance levels,

Forex trading advisors also have their disadvantages that any trader should remember:

  • – Certain misconceptions of a trader regarding trading methods are completely projected onto a trading robot during programming. Therefore, it will automatically implement these misconceptions every time.
  • – Trading robots are not able to take into account the controllability of the financial market, and in case of sharp reversals, they can “drain” everything that they earned under the previous conjuncture.
  • – In the event of an unforeseen market collapse, the forex advisor will, as if nothing had happened, continue trading according to a given strategy – unlike a person who can think outside the box.
  • – An expert robot can only be programmed to analyze narrowly focused information and, if any important news appears, it will not take them into account, it cannot carry out fundamental analysis.

Despite all the automation of trading, a trading advisor, for the above reasons, must be under the vigilant control of a trader. In other words, a trader cannot completely devote all the work to the program – you will need to get interested in learning and develop skills in it, as in any profession.

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