How to Choose the Best Expert Advisor for Automatic Trading

  • How to Choose the Best Expert Advisor for Automatic Trading

    In the forex industry, which is the largest market with a market capitalization of more than 5 trillion dollars in circulation. Making forex trading an increasingly popular business icon as a way of multiplying money.

    If previously forex traders traded manually, some of them considered success using the manual method to be unsatisfactory because of the lack of discipline in trading.

    With the advent of automatic trading technology with expert advisors or better known as trading robots, many traders are trying to design trading robots with their strategies.

    However, not all traders are knowledgeable in expert advisor development. So most of them are looking for profitable trading robots either through community forex forums or buying expert advisor products that are sold on the market.

    In this matter, choosing a robot is of course very important to get a robot that is tested to provide consistent profits.

    Then how to choose a robot, what factors need to be considered, I will explain as best I can in this article.

    What is an expert advisor?

    If you trade manually, you will usually create a trading plan, plan your trades with a certain strategy, certain risk management, how to enter and exit the market either by manual cut profit or with target profit and stop loss.

    Everything you plan has been carefully calculated, but in practice, often emotional factors influence your decision-making.

    As a result, a well-designed trading plan becomes useless.

    An expert advisor is a program or software designed using a specific algorithm to carry out automated trading.

    Depending on the strategy algorithm used, the expert advisor will only open new positions when all the predefined parameters are met.

    There is no intervention from traders and everything is automatic. In practice using expert advisors for the mt4 platform, it needs to connect with the broker's server at a smooth speed.

    Therefore, to be able to guarantee expert advisors running 24 hours a day, many traders use VPS with certain settings to run their trading robots.

    Maybe your broker provides VPS services with certain conditions or you might prefer to rent a VPS from another provider.

    For example, you have a trading robot that works using the Bollinger band strategy with entry point rules when the price has reached the upper band and lower band.

    Say you have a Bollinger band strategy with buy entry when the price has touched the lower band, and sell entry when the price has touched the upper band.

    If these parameters have been met, the trading robot will open a new position according to the predetermined position size settings.

    Does expert advisor work?

    Many traders have proven that using a trading robot works. It happens when the trading robot is properly programmed and set up.

    So if you go to find a trading robot seller who is poor in knowledge, it may not work properly.

    What makes it even more interesting is that the expert advisor can be developed to carry out various useful functions including.

    • Allow doing automatic trading.

    • Allow setting the way of entry and exit points.

    • Allows setting the maximum use of risk in trading.

    • Set the profit target and stop loss. 

    • Provide trading recommendations.

    • Copying trades of other traders.

    • And other functions that can be developed.

    What makes it even more interesting is that the expert advisor can be developed to carry out various useful functions including.

    Trading robots can work 24 hours 5 days a week according to forex market hours.

    This is not possible for manual traders because they need rest, need to eat, bathe, and so on.

    And using a robot does not involve emotions because the robot works based on the logic that has been embedded in programming.

    Whereas most traders fail for several reasons, one of which is due to emotional factors that make their trading method messy.

    Are all expert advisors profitable?

    If you are an experienced trader, maybe you already understand very well that not all trading robots are profitable.

    To do research, you can join the forex community which discusses expert advisors, and you will find that not all robots that are scattered on the network will provide a profit.

    Even many traders who lose money after buying a robot at a high price, it is not a guarantee of a profitable robot.

    Many robots in circulation are based on martingale trading, indeed this can provide a profit, but the risk is too high. It's no surprise that many traders using the martingale robot to be traumatic.

    A reliable trading robot will be able to provide profit for more than a year or two years, maybe even forever.

    How to choose the best expert advisor

    If you do not know about designing robots, what you can do is contact a robot programmer, or buy a robot that is sold through a website at different prices.

    When you call a programmer and ask him to build a robot for you if you don't have a profitable strategy that's wasting money.

    So make sure if you contact the programmer you already have a strategic framework that has been tested with either a backtest or a forward test. So that programmers will make your robot according to order.

    The following tips for choosing a robot can be useful for you.

    You must be educated yourself

    When you see any ad for a robot that claims to make hundreds of dollars or thousands of percent profit, maybe what comes to your mind is how easy it is to get money by simply installing a trading robot.

    If you don't educate yourself you will likely fall into that trap. Forex is a speculative trade and is therefore called a high-risk high gain business.

    If you don't have enough money to buy a trading robot, don't force yourself to spend money. Most of the victims of robot vendor scams are beginners who dream of getting big profits in a short time.

    Check developer background

    If you are interested in any trading robot, make sure to do a developer's background check.

    You can use a credible site like Forexpeacearmy to cross-check all your questions to make sure that the robot you want to buy provides valid data.

    If there is hidden data and it makes doubts then look for other trading robots that are more convincing. You can try to ask social media or your friends who have experience using trading robots.

    You can ask some questions to get a more detailed image from a robot developer, for example

    • Are robots made by reliable programmers?

    • Whether the payment method offered is safe and you can make a complaint if the robot does not match expectations.

    • Is there a money-back guarantee?

    Start choosing the best trading robot based on the best review

    If you wish to use a trading robot, it is advisable to be active in the forex community forum which specifically discusses expert advisors.

    In the forum, of course, it is more honest among its members who come from various countries for various purposes.

    Experienced traders usually like to share reviews about a particular robot. If the review gets the same response as other traders, the robot can be said to be reliable.

    But you should also cross-check other members' testimonials, whether it's really from personal experience or because of an affiliate relationship with the developer.

    Do a backtest with yourself

    Maybe after doing a cross-check from the seller's backtest results via Myfxbook or FXblue, you feel confident that the robot you are going to buy is reliable.

    Before buying, if possible do a backtest by yourself, but maybe not all sellers provide a trial version to test the robot they are developing.

    Backtest is a strategy for testing trading strategies or robots using historical data from the past.

    By trying it yourself, of course, it will be more convincing with the robot's performance so that you are sure to buy it.

    See the live test results provided by the expert advisor seller

    If the trading robot seller only gives backtest results and hides the live test, you should be suspicious.

    Often a good backtest trading result occurs but it fails in live trading.

    Usually, the seller will provide live test results published on Myfxbook or FXblue.

    Where in the live report there are types of brokers, initial capital, profit, floating, drawdown, and others.

    The best expert advisors will of course show pretty good profits, minimal losses, and minimal drawdowns.

    Adjust the broker type and account type

    Some traders report that when using a trading robot at different brokers, the results are different.

    Sometimes the robot does not match the broker we use because of possible differences in spreads, requotes, and also leverage or server speed.

    So you have to find a robot that suits your account type, and your broker to get the right results.

    Give the money-back guarantee

    Choosing a robot seller that provides a money-back guarantee will of course be more comfortable in purchasing because he assumes that the seller is selling quality products with a money-back guarantee.

    However, sometimes this becomes biased when it turns out that the seller provides a money-back guarantee, but, for many reasons, he is not willing to return the money.

    So cross-checking about the developer's background can minimize dealing with scam sellers.

    Understand statistic expert advisor

    Maybe you will be faced with certain statistics from the performance results of the trading robot that you are going to buy.

    For this, you must know the terms in statistics so that they can be translated for the analysis of robot performance.

    Like as below example 

    The common statistical term is

    Profit factor

    It calculates the ratio of the sum of all successful traders and the sum of all losing trades. This is the ratio of gross profit to gross loss.

    The higher the factor profit value, the better it is because it is related to the ratio of successful and unsuccessful trades.

    It is not recommended to choose a robot with a profit factor of less than 1

    Expected payoff

    It has the meaning of estimating the average return amount of each trade.

    This value is based on historical data so it is not a guarantee of similar results in the future, but it is useful for showing how likely EA will perform.

    The way it is calculated is by calculating the difference between the average profit for each trade and the average loss for each trade.

    Drawdown

    A drawdown consisting of 

    • Absolute drawdown. 

    • Maximum drawdown. 

    • Relative drawdown

    These are the statistics for risk that will give you an idea of ​​the performance of the expert advisor when in trouble.

    Say that the maximum drawdown represents the maximum loss since the last high.

    You must know the drawdown of an expert advisor so that you can determine whether or not the trading robot is worth buying.

    The higher the drawdown, the more risky the trading robot is.

    Conclusion

    Many robots are sold in the market but not all of them can be relied on to make a profit in forex or crypto trading.

    But the use of trading robots has been carried out by large institutions so that forex trading today is like a competition in making trading innovations that are more efficient and profitable.

    The trading robot has several advantages compared to manual trading but it also has disadvantages compared to manual trading.

    Most working robots are based on technical analysis with indicators as reference for trading signals and these are not designed for news trading.

    But in the future, the developer may innovate trading robots that can work with news trading.