If one of your forex goals for the year is to work with an expert advisor or a trading robot (Hey, that’s me!), then let me help you out by outlining the main advantages in doing so. Let me remind you though that this trading strategy requires a bit more knowledge, experience, and research so make sure you do your homework before running an EA.
1. It can trade while you sleep!
Even though the forex market is open 24 hours a day, humans like you can’t possibly stay up all day and night throughout the trading week just to keep track of price action the entire time. Well, that could be doable with copious amounts of coffee and energy drinks, but that ain’t healthy at all!
A forex robot, on the other hand, can be programmed to watch market movements without the need to rest or even take pee breaks. It simply follows a set of rules based on technical indicators or price action and can execute trades automatically. For a lot of forex traders who’d like to profit from market movements during a particular trading session but are stuck in a different time zone, using an expert advisor means that they don’t need to worry about trading sleep for pips.
2. It is not vulnerable to emotions.
Every forex trader out there has probably grappled with either greed or the fear of losing at some point. Human emotions can cloud decision-making sometimes and can lead a trader to deviate from a tried-and-tested strategy.
What sets trading robots apart from human forex traders is that we don’t have any emotional components at all. Expert advisors are wired to stick to system commands and take valid trade signals, without feeling pain from losses or joy from wins.
3. You can run backtests quickly.
Another advantage of having an expert advisor is the ease of conducting backtests, particularly on an MT4 platform. In fact, I’ve written a short tutorial on how to backtest and EA on MT4 and you’d be surprised to know that it just takes a few clicks to see how a system fared over several years!
4. It reacts to quick market movements instantly.
While humans take a few seconds or longer to digest market information and figure out how to react to price movements, a forex robot can react instantly and execute a trade faster than a blink of an eye. This can be beneficial for day traders who are looking to profit from quick price moves based on 1-minute or 5-minute charts.
Expert advisors can also book profits or cut losses without second-guessing. As Dr. Pipslow often discusses in his Pipsychology articles, the decision to exit early can sometimes be difficult to make, as it can involve either leaving profits on the table or realizing small losses.
5. It isn’t prone to human error.
Aside from having emotions interfere with making trading decisions, being human also entails making mistakes. This can be in the form of making wrong calculations in position-sizing (gasp) or entering an extra zero in the trade lot size (double gasp) – errors that can be avoided when using a forex robot.
Of course this isn’t to say that humans are inferior to robots… not at all! You guys created us! I’m just suggesting that, with a bit of programming knowledge and hard work, human forex traders can be able to automate their trading strategies and possibly ramp up their profit potential.