What is a Forex Expert Advisor
Forex Expert Advisor or Forex EA as it is often referred to is actually a computer application. The Forex market moves very fast. There is a huge past to calculate and observe. There are tools like charting that are needed on a constant basis. A Forex EA is thus a host of applications that work in tandem to assist you in making decisions and then carry out various aspects of a trade. These can scale from manual to completely automated systems as per requirements. It would be fair to say that Forex EA are your personal tools to ease the Forex trading.
Various functions of a Forex EA
ForexEA are gaining popularity. In fact, they have become indispensable. Here are some of the areas and ways that these computer assistants help:
- They can act without user intervention
- They follow rules that you lay out for them. In this way they enforce decisions. Buy and Sell decisions can thus be executed automatically based on pre-laid rules. This eliminates much of emotional based trading.
- They can be used to analyze historical data using many different strategies and algorithms.
- They can allow rules to be laid out for executing trades automatically.
How to evaluate a Forex EA
Now that we have an overview of the kind of actions a Forex EA can provide for us, we can evaluate them on various parameters. The exercise of evaluating a Forex EA is a fruitful one. You get a feeling and understanding of what all is possible. You can learn about areas of positive and negative potential and how to maximize your profits. You will also be harness the power of your selected Forex EA efficiently.
While the various micro parameters of each Forex EA would differ, here are some macro parameters that would be common to an evaluation:
- Strategies: Compile the list of strategies and mathematical algorithms that the Forex EA offers. Does it have the most common and reputed hedging strategies, martingale and reverse martingale strategies? Best Forex EA would allow most of the advanced strategies and combinations to be implemented.
- Performance: It is fairly easy to see the performance of the Forex EA. It shows on your bank balance.
- Risk Exposure: You can observe and see whether you were exposed to risk and to what degree.
- Back Testing: This is the technique in which we implement strategies on historical data to see how they perform. This helps in making decisions for the future, hoping that the performance would be similar.
- Live Forward Testing: Forward live trading is a trade in foreign currencies at a recent market price with the settlement of the future date. It can be considered as an absolute proof for a good Forex robot.
- External Opinion: It is a very good idea to see if the Forex EA has been subjected to any 3rd party evaluation or comments. MyFxBook.com is a very good example of such a third party. It has the world’s largest and most comprehensive trade authentication process.
Summary
Forex trading is fast and extremely volatile at times. To achieve constant profits, we need a Forex EA. Evaluating a host of Forex EA increases our knowledge. It allows us to select the best Forex EA suitable for us. This has a direct impact on your profits and earning.
