Things you need to know about Expert Advisor
The Forex market is the largest financial market in the world. Every day, new concepts are being created so that traders can make more money. As a result of hard work and constant research, we now have Expert Advisors which are also known as EAs in the market. It is nothing but a smart trading tool that can analyze the potential direction of the market by analyzing the critical market metrics. Many novice traders often think EAs can trade better than human beings and thus they start relying on them blindly. But if you follow this technique, you will lose money most of the time.
Today, we are going to discuss some of the key factors associated with EAs. After reading this article, you should be able to use EAs like a professional trader.
EAs should always be considered as helping tools. If you think they will do perfect technical analysis, you are wrong. You need to analyze the market data using a robust strategy and find potential trade signals. Once you have identified profitable trade signals, you should be matching the data with the EAs. If there are any discrepancies, you should check the trade signals again. At times, you might not find profitable trade setups due to stress. But the EAs should be able to determine profitable trade signals and give you an alert. So, you can manually analyze the market data and look for trade signals.
Analyze the quality of the signals
After finding potential trade signals, you can use the EAs to analyze the quality of the trade setup. But remember, you need to use the EAs with smart trading platforms offered by high-end brokers like Saxo. If you install an EA in a low-end trading platform, it might not work properly. That’s why professional traders always pick high-end trading platforms. It will also help you to do the manual analysis in a much smarter way.
The direction of the trend
Some of the EAs are extremely efficient in finding the direction of the trend. Novice traders who are having trouble determining the course of the trend may rely on such EAs. By analyzing the EAs in the market, they can easily find the potential direction of the trend. Once you learn to identify the trend direction, your efficiency will improve. You won’t be taking any trades against the trend and thus your confidence level will slowly increase. But make sure you rely on the higher timeframe while taking data from the EAs.
Dealing with the news
Some of the EAs can easily identify the volatile period of the market. They do so by analyzing the consolidation period. Usually, the consolidated market breaks after a major news release. So, if the EAs identifies a consolidation period, you should be cautious since a breakout may take place at any moment. Professional traders prefer to analyze the economic calendar in this case as it helps them to stay tuned to the market. Always remember, EAs are one of the best helping tools you can have as a trader. But you must learn to use them properly or else you will lose more money.
Learning its use
Rookie traders often install the EAs in the main trading account. By doing so, they risk a large portion of their trading capital. Instead of doing that, they should install EAs in the demo platform. As a new investor, you should always think about the safety of your trading capital. Never try to learn things with the real trading account. Take advantage of a paper trading account and learn the functions of the EAs. Integrate the EAs into your existing trading system and analyze your performance. Last but not least, never increase the risk factor just because you know the functions of an Expert Advisor.