The forex market offers several opportunities to make money throughout the trading day. Whichever direction you choose to trade – whether you’re long or short, there’s always an opportunity to make money. Unfortunately, there is also the ever-present chance that the market will go against you, leading you to loss. That is why it always pays to be informed, and the best strategy is that which takes the most information into account.
What is a forex EA?
More commonly referred to as forex robots, a forex EA is a software that’s designed to identify trade signals based on a set of pre-programmed rules and execute the trades when they meet these instructions. On the MetaTrader platforms, the name forex EA is more common. However, you can find similar robots on other platforms such as cTrader and NinjaTrader.
These expert advisers have a few key advantages. First, they are capable of analyzing the markets 24 hours a day, 5 days a week. Therefore, they can generate way more signals than a human doing it manually. Second, they only follow the strategies defined in their rules. This way, they completely eliminate the aspect of emotional trading, which is a key cause of losses, especially among novice traders.
These robots also execute trades instantaneously, which means you enter trades at better prices. This directly translates into increased profits.
How they work
These expert advisers use software to monitor the markets for opportune trade signals. Using algorithms, they analyze live price data and volume data, comparing it to a pre-programmed set of instructions that act as a filter. Whenever all the filters are satisfied, they flag the situation as a trade signal.
Essentially, you can think of a forex robot as a collection of rules that are coded into a computer program, which then enforces these rules. Live market data such as price movements, volume data, and the outputs from indicators are compared against this set of instructions. When all these data points meet the program’s set conditions, the trade is flagged and executed.
In addition to executing the trade, forex EAs are capable of determining the position size to be taken and the location of stop-loss and take-profit levels. The robot will then closely monitor the trade until either one of these levels is triggered.
Who qualifies as a forex programmer?
A forex programmer is any person who is well versed in building trading software. They must also be conversant with the different trading platforms and the programming languages they are built. To that end, there are three vital skills that a good forex programmer must possess.
First and foremost, the programmer must have extensive knowledge of the platform their intended robot is supposed to run on. There are several forex trading platforms, the most common being the MetaTrader platforms, NinjaTarder and cTrader. By understanding these platforms, the programmer will know what capabilities and limitations their robot will have on the platform.
The second vital skill the programmer should have is adequate familiarity with the relevant trading platform’s native language. For the MetaTrader platforms, this language is the MQL4 and MQL5 for MetaTrader 4 and 5, respectively. By coding the robot in this language, the programmer ensures that it has the most efficient interoperability with the trading platform.
The third requirement is a working knowledge of all the problems that may arise with the forex robot. This may include bugs, flaws, and any other common shortcomings of forex robots that may hinder their efficiency.
Why should you hire a forex programmer?
If you have some programming knowledge, you may be thinking of creating a forex robot yourself. However, there are several advantages of going with a seasoned professional in the field. First, an EA programmer will know all the trading platform’s bells and whistles and how to design their robot to take full advantage of them.
Second, a good EA programmer will have experience in the forex robot creation space. This gives them an upper hand in terms of tackling any challenges that may arise, as this would not be their first rodeo. This way, they can be proactive in dealing with these challenges even before they arise. Additionally, they can spot and fix any bugs faster.
Make your own forex robot in 6 easy steps
- Observe price movement patterns
By studying the markets extensively, you can notice repetitive patterns that you can take advantage of for profit.
- Choose technical indicators that highlight these patterns
Indicators will help to flag entry and exit signals whenever the patterns you identified manifest on the price charts.
- Extensively define your strategy
This will involve describing a set of rules on how trading opportunities should be identified and the appropriate entry and exit signals. You should also define your risk management strategy and the position size you intend to take. Make it as detailed as possible.
- Hire a qualified forex programmer
You will need an experienced programmer to turn your instructions into code that can be understood by the trading platform. This programmer should have built similar EAs in the past, and they should be clear on all your instructions.
- Test your EA
When the robot is ready, you should subject it to rigorous backtesting and forward testing. The best way to forward test is to use demo accounts so that you don’t lose capital during the process. These tests will help highlight any tweaks and adjustments that need to be made.
- Live trade your robot
Once you’re satisfied that your robot is profitable, you can use it with your live trading account. However, even then, you should not let the robot run unmonitored. You should pay close attention to ensure that it remains profitable.
Forex robots are an efficient way to take advantage of the markets 24 hours a day. They also eliminate emotional trading and allow you to enter trades at optimal prices. The good news is, once you have a well-defined trading strategy, you can build your own EA in six simple steps.