Much has been written about the aspirations of automated forex and market trading, non-more so than the Expert Advisors operating off MetaTrader 4 and 5. Also known as trading bots or algos. Expert Advisors have attracted millions of retail traders attempting to profit off the world’s most liquid and lucrative markets with very little to no human interaction or emotion.
Is it real or just another scam?
Here today gone tomorrow, an all too familiar trait of the industry.
There are 1000’s of Expert Advisors on the market, available from professional software engineers through to hobbyists. The challenges plaguing the industry have come in many forms as amateur retail traders have flocked to finding the promises of passive income through automated trading.
Much of the industry runs off the back off ‘anonymous’ platforms such as Telegram, which seems to be the informal home of Forex Traders. The automation of signals, payments and communication are key benefits and drivers behind this proliferation. However, the very real risk of scams abound in this world, and many traders find themselves caught out, especially those who are new to forex trading.
Finding a legitimate automated solution is getting harder, however there are many great ways to at the minimise your chances of falling unwittingly into a forex scam.
An increasingly popular choice is to use online review websites, where a trader can evaluate live Expert Advisors, and assess using their own ranking criteria. One leading impartial authority is Forex Peace Army, who work tirelessly to review and assess, and importantly report on known scams.
Another important attribute would be to check if the provider has some form of legitimacy (a website, a company, real trade accounts, customer support, and so on). Success is never guaranteed, but what will prevail is finding a supplier who can offer as much support as necessary to help the trader on their journey.
And when it all goes wrong... as it inevitably does?
Customer support is absolutely critical when it comes to any form of trading, automated or not. When a customer combines forex trading with automation, to have the required support to guide you through the process, and to continue to be available after purchase is a necessity.
Very often, it becomes apparent how much support is truly available when a trader finds themselves in troubled waters. Every system will eventually succumb to a crisis, nothing is infallible. What will make all the difference is knowing you are not alone, and having the required support to assist with the correct actions that can be taken to mitigate the situation.
A good provider will have one or more customer support channels, and be available for traders as required. Getting up and running is really only a small part of the required support, the larger concern and focus should be on what happens once the account goes live and is trading.
Common support responses we hear are, “Just add more funds”, “Why was your Expert Advisor live, you knew it was NFP”, “Stop the auto trading” and many more. Whilst these are reasonable responses, they often do not help without the customer clearly understanding the implications of the decisions they are making.
How does a trader get an Expert Advisor running?
There are a number of ways this typically works, the most common would be to purchase the Expert Advisor from a verified supplier. The purchase will likely be a one-off cost, and will be accompanied by additional information to assist with the installation and configuration options (with what are known as Set Files).
Best practice would be for the trader to run the Expert Advisor on a Windows Virtual Private Server (sometimes this is provided by the vendor). A VPS is an essential tool in the auto traders backpack and will ensure the Expert Advisor can run uninterrupted without fear of connectivity failures, whilst also ensuring fast execution times for order placement.
Depending on the trader’s level of expertise, this process can be as fast as 10-15 minutes, or it can take a few days to figure it all out. A huge benefit will be once you have a VPS, it can be used to run quite a number of MetaTrader terminals, and thus Expert Advisors.
There are a number of other technicalities which traders will learn about as they mature their skills, such as performance optimisation of the terminal, VPS monitoring to ensure the server has not rebooted, and security to ensure no attacks. These take time and can add more cost onto the back of the monthly VPS fees.
What type of Expert Advisors are available?
Broadly categorised, not many, however due to the complexity of trading there are many nuances buried in the detail. We have tried to provide some guidance below, but note this categorisation is not exhaustive.
- Strategy Expert Advisor
- Signal Expert Advisor
- Trader Manager Expert Advisor
- Information/Stats Expert Advisor
The list could go on, but perhaps they would just be sub-categories of the above. By way of an example, a Signal Expert Advisor could receive their signals from an external source, or they could use technical indicators to generate their own signals.
The first two types of EAs are the ones most generally on offer as performance- based offerings, meaning they trade largely automated and are designed to make profits and hopefully manage risk.
What will separate the EAs in these categories are largely around quality and track record. Some of the EAs may have Set Files which look like a NASA control room, whilst others are fairly basic with little room for customisation.
It must be noted that an EA with 100s of settings may not necessarily mean it will generate profit, it’s the configuration of the set file along with a solid risk and money management strategy that will likely go a long way in determining the profitability. Again, we have over-simplified our explanation, and our intention is not to education on the details, but to highlight there are many differences in EAs which are available so take note when purchasing what you are likely to receive.
How much profit can an EA make?
To even attempt to answer this would be misleading but is probably the most frequently asked question we get asked by customers.
There are so many variables with trading profitability in general, with alot tied to factors such as account size, risk style, markets being traded, frequency of trading and so on.
9 times out of 10, looking at the historical performance of an EA will give the trader a reasonable idea of what the potential is. It will be most important to note the disclaimers attached the performance, such as the account size which generated that profit, over which period, and with what account type.
A useful barometer would be to look at a variety of accounts with different trade histories so you can understand what to expect. A mix of aged accounts of 1 year or more, and newer accounts will be very useful in this exercise.
If you have purchased a one-off EA, your monthly costs will be limited to the VPS (and its other associated costs), so your payback pressure is lessened. If you have a couple of bad months, you do not have to cover many monthly costs. The downside would be the initial outlay to get the software, which depending on the vendor could be anything from $99 to well over $1,000.
Other providers, such as Hydra Lynx, offer an easier route in with a lower cost monthly subscription. What is included in that subscription can vary greatly, and it would usually be more limiting in functionality much like any software subscription offering.
The Hydra solution is 100% all included, meaning you have no other monthly costs, and you have a reasonable amount of control around configuration options and risk/money management. Subscription offerings usually come with a more robust customer support model, as the entire model is built around happy profitable customers, to ensure monthly subscriptions are paid. The relationship is balanced!
How to decide what to do?
Experience is everything with trading. You will make mistakes, in fact very few get it right very fast.
Enjoy the learning process, do your research when you don’t know what something means, and find people who can help you. It doesn’t have to take 10 years of trading to be a success, but nothing good every came from trying to short cut the process.
Read as much as you can from reliable and reputable sources, look for options to run on demo accounts, or monitor live accounts more closely.
Our main piece of advice would be to have realistic objectives about what can be achieved within your own means. Never trade with money you ae not willing to lose, ensure you are diversified, and step slowly into the trading waters to avoid getting burnt.
Do it right, and you can make profit; you can learn, and you will have fun.