The journey of forex trading doesn’t always run smoothly, and even the most successful traders will experience some bumps in the road. This is especially true for traders who opt to head down the manual trading route, ignoring the automated processes that can aid their trading. Although automated trading does have its drawbacks, any trader can exhibit tighter control over their currency-trading portfolio through such means, particularly when they use expert advisors (EAs).
Considering the positive impact that an appropriately used EA can have on anyone’s trading efforts, the following takes an in-depth look at how to install and use an EA on MetaTrader 4.
What Is an EA?
An expert advisor is a software tool that forex traders can use to identify trading opportunities based on promising signals. EAs are similar to forex robots in that they are used to automate market pattern identification and generate valuable trading signals, but EAs differ in a key way: Whereas a forex robot is able to automatically make trades on your behalf, an EA can’t automate actual trades.
Instead, an EA functions as an intelligent advisory tool that offers recommendations but still requires the trader to execute any proposed trades. These EAs can be found through the MT4 or MT5 trading platforms, but you can also build your own to fit your trading strategy.
Advantages and Disadvantages of Using EAs in Forex Trading
An expert advisor can be a polarizing trading tool, with proponents and detractors split along a clear line of division. For fans of EAs, the benefits of these tools are that they conduct research 24/7, helping traders keep tabs on opportunities that may develop overnight. A well-designed EA also enforces a strict trading strategy and parameters for identifying promising trades, which takes the emotional or human element out of trade evaluation. Ultimately, this leads to less biased trading recommendations.
The best forex EAs are able to integrate with the MT4 and MT5 platforms, offering convenience for forex traders. But they also present potential drawbacks: The rigidity of an EA, for example, can also be a limitation in evaluating trades, because this tool can’t go beyond its parameters to evaluate a trade opportunity, or to incorporate key information that might influence the perceived value of a trade.
Meanwhile, because the performance of an EA is so individualized to both the parameters of the tool and the market conditions being observed and evaluated, there is no guarantee that this tool can deliver steady profits over time. This is even more true when you’re creating your own EA: Although you benefit from being able to build an EA in the image of your own trading strategy, there’s little certainty that doing so will lead to profits.
The performance of an EA can also vary, which means you’re susceptible to dramatic and unpredictable swings in performance. This could mean, for example, that if your EA performs well during a demo test, that performance could be an illusion—and once the EA is used for live trading, its performance could come crashing back to earth. You might think you’ve created the best forex EA, but you’ll have no way of knowing until you put your real money at risk.
What You Should Know Before Using an EA
If you’re interested in incorporating an EA into your trading strategy, the most important thing to remember is that you shouldn’t start using an EA with live trades until you’ve had time to practice and become comfortable with this trading tool.
Even though performance can be difficult to evaluate over a limited sample size, practice through a demo account will give you an opportunity to become familiar with your EA and figure out how to best use it in support of your trading strategy. If you’ve created your own EA, this is also an opportunity to test-drive your own creation and identify potential amendments you want to incorporate before taking your EA live.
You can also use this trial period to determine how you want to balance the guidance of your EA against certain variables and data points it can’t account for. Even the best forex EA, for example, can’t take political or news-related variables into account when identifying trade opportunities. As a trader, you’ll need to balance any recommendations this tool offers against the potential implications of events beyond its view.
Creating an EA
Let us tell you: Creating your own EA is not the easiest task—there is a reason why there are lengthy courses related to the process. However, thanks to software shortcuts and various coding templates, anyone can create a basic EA. Helping you get up to speed, creating an EA in MT4 means understanding the coding structure of an order, along with grasping MQL4, which is the “language” used to create an EA.
Each EA you create will follow a similar pattern of:
- Special function initialize
- Special function start
- Special function de-initialize
The header is the lead within any EA. This is where you will place the indicators and parameters within which your EA will be working. Through the header, you can also implement any money management rules and dictate global variables such as stops.
Anything that follows builds upon this foundation. On top of this, you’ll need to add the special function initialize, special function start, special function de-initialize, and control.
The latter two functions are fairly self-explanatory, addressing your exit from a trade. However, the special function initialize and special function start are a different story. Through this part of the coding process, you can retrieve the value of your chosen indicators, address trading logic specified within the header, and address current orders and signals. The special function part of the code is what obtains the indicator value before using it to cycle through the other active processes.
Purchasing an EA from the MetaQuotes App Store
Creating an EA from scratch isn’t for everyone; it can be a complex and lengthy process. For those who don’t have the wherewithal to create one, you can opt to buy something that is premade. Now, it must be said that an EA that’s been crafted by someone else will lack the level of customization that a “homebrew” EA will have, but it will also be easily accessible.
The MetaQuotes app store, which is currently rife with EA options and variants, allows MT4 users and developers to offer up EAs directly to other MT4 users. Through this level of choice, you can modify the search criteria and find EAs that suit your short-term and long-term trading needs.
How to Install an EA
Whichever way you go about getting your hands on an EA—creation or purchase—actually installing it isn’t all that complicated. The following addresses how you can install an EA through the MT4 platform, step by step.
Step 1: Transferring Files
After you’ve downloaded or created an EA, note the save location on your computer/device. From there, look for the MetaTrader4 folder, which is usually found within a computer’s C drive. Take the original EA files and paste them into the “Experts” folder, agreeing to any admin permission request should it appear.
Step 2: Installing the EA
Boot up MT4, and then look for the “Expert Advisors” section, which should be located under the “Navigator” section to the left side of the screen. Then click on the “Plus” icon and select the EA, which should now appear as available. After the EA has been selected, drag it onto the charts to ensure that it’s active.
Step 3: Adjusting the Settings
In order to get the most out of an EA, you’ll need to adjust its settings. When you do this, a pop-up box will appear, allowing you to tweak the EA as you please. Then you can click “OK,” and you should be ready to go.
Every trader is always looking for an additional “leg up,” and for those who have a preference for automated trading, EAs may represent just that. Although EAs carry a large number of advantages—and they can certainly help boost your trading efforts—they are not for everyone. We must remind you that using an EA blindly is ill advised, so test it out through a demo platform first as a means to get a true understanding of it before committing any actual capital.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.