An Expert Advisor, also known as an EA, is a computer program that trades automatically in the market following a given set of rules. EAs are written in a proprietary programming language called MetaQuotes Language 4 (MQL4), similar to C++.
EAs were introduced by MetaQuotes Software Corp—the company behind the MetaTrader trading platform—in 2005. Since then, they have become very popular among traders, especially those who trade in the foreign exchange (forex) market. Over 90% of forex transactions are estimated to be executed using EAs.
How do Expert Advisors Work?
Expert Advisors are designed to take the emotion out of trading by following a pre-determined set of rules. Once these rules are programmed into the EA, the EA will execute trades automatically in your account according to these rules.
For example, you could program an EA to enter a long position in EUR/USD when the 50-period moving average crosses above the 200-period moving average on a 5-minute chart. Alternatively, you could program an EA to exit a trade when your stop-loss is hit.
The beauty of EAs is that they can do all of this without your input. This is perfect for traders who want to take a hands-off approach to their trading or for those who want to test their trading ideas without risking any real money.
Are there any disadvantages to using Expert Advisors?
One potential disadvantage of using EAs is that they can remove the human element from trading. After all, EAs are designed to blindly follow a set of rules—without your emotional input. This can be good or bad, depending on your perspective.
Another potential disadvantage is that EAs are only as good as the code written for them. This means that if there are any errors in the code, the EA will likely make trades that lose money. Therefore, it’s important to choose an EA from a reputable source and to backtest it thoroughly before putting it into live trading mode.
Expert Advisors can be a great tool for traders who want to take a hands-off approach or those who want to test their trading ideas without risking any real money. However, it’s important to choose an EA from a reputable source and to backtest it thoroughly before putting it into live trading mode.