The frequent fluctuations in the prices of currencies extensively influence the volatility of the FX trading market. In such a scenario, it is rather challenging to keep track of every price movement constantly to identify the most profitable trading opportunities.
Primarily to overcome this issue and to remove the tendency to make decisions based on emotions many traders are inclining towards using an FX expert advisor to execute a trade.
The best forex EA will satisfy the crucial factors as well as will fit your needs and trading style to deliver the desired results. This article will explore everything you need to know before launching your own FX EA.
Introduction to FX Expert Advisor
Forex EAs are software developed in the MQL programming language that enables traders to get notified about the best timings to execute a trade while generating certain trading indicators.
This program can be used in multiple forex trading platforms, MT4 or MT5, for example, enabling investors to configure their trading methods before applying.
While FX expert advisors usually follow a set of parameters, the principles that EAs use to operate might tend to vary. Investors mostly prefer to rely on EAs for their capability to minimize the risk of making impulsive trading choices, just like any other automated system.
How to an FX expert advisor function?
The top FX expert advisors can be configured to perform in a variety of ways, including searching for key patterns and breakouts.
An FX EA can evaluate the marketplace and also the performance of specific financial assets using many signals and alert the trader regarding profitable trading possibilities.
While most EAs are used for merely generating certain alerts, certain expert advisers, on the other hand, are intended to fully monitor your account. The concept is that it will examine your trade balance before determining how much of it can be risked.
It may also evaluate the transactions and determine which trading orders should be used. When an FX expert advisors has all of the data required, it also considers the existing market scenario. As a result, traders are alerted when a certain opportunity becomes accessible to initiate a trade.
Points to consider before launching an FX EA
1. Significance of Evaluating Data
It is often a common conception to assume if the backtesting results come satisfactory that means the system is ready to deliver successful results. In fact, the outcomes are more likely dependent on the quality of input data which implies that poor quality data can lead to unsatisfactory results.
In MT4 and MT5, a standard dataset could only achieve a modeling accuracy of up to 90 percent. While this appears to be a positive trait, it can lead to significant disparities in backtesting and actual performance, especially in shorter periods.
2. Considering the Speed of Execution
Typically the duration of a trading session on MT4 and MT5 is 30 seconds where the session is more likely to get timed out in case of inactivity for more than the time mentioned.
This necessitates re-authentication of the IP address which may take up to two seconds, depending on the brokerage. While it may appear to be a short window of time, these kinds of interruptions can leave a major influence on the outcomes of your transactions during the period of peak volatility.
3. Debugging the Code
You won’t more likely find a debugger option in the accessible instruments since MetaQuotes’ policy indicates that they focus more on the demands of brokers than investors.
Although there are some solutions to overcome this issue including adding print functions in the code directly or by installing Microsoft DebugView to access a systematically formatted log.
4. Checking the Connection of MetaTrader
To operate your EA, a proper connection must be built between your system and the brokerage. It will be unfortunate to find out that despite having a properly functional EA, it is unable to operate just because of poor connectivity.
While developing your own forex EA may take these factors mentioned above to evaluate its potential, it can surely be the best way to analyse your strategies to the fullest.