The Expert Advisor is a very sophisticated trading software tool. Each one is built upon a specific set of rules, sits on your trading platform and executes your trades. Actually, it is a robot.

The majority of forex traders fail as a result of the human emotions of fear and greed. When trading with an Expert Advisor - a purely logical tool - the emotions are removed from the trading decisions.

Many times, in an effort to grab that last pip of profit, a trader will hold on to a trade even when logic dictates an exit. On the other hand, a trade is often exited prematurely due to fear, and profits are left on the table. The Expert Advisor trades with a plan, regardless of outside influences, and does this 24 hours a day when the market is open.

The Expert Advisor watches the market for you and will execute trades based upon predefined parameters. Unlike a human, it is also capable of monitoring indicators, support and resistance levels, and many other factors in multiple timeframes and making immediate decisions.

There are many Expert Advisors on the market today, and the prices run from OK to ouch. One must be sure to do some research and get answers to questions such as; are they timeframe or currency specific? Do they follow trends or attempt to predict them? How do they handle risk management? Do they recommend a 2-4% risk or something lower, such as 1-3%? Do they support stop losses? How do they handle take profit levels? Do they ride downturns and only exit trades once they’re in profit?

There are alot of questions to be answered prior to purchasing your Expert Advisor. You need to be sure that it will run on your trading platform, and that you can run multiple EA’s on one account. If you have a mini account, be sure that your EA of choice isn’t only for regular accounts.

Prior to installing an EA on your trading platform, there’s one more thing to think about. What happens if your computer dies, or the power in your area goes out? Remember that the EA handles your trade, and resides on your computer, but open trades are in the hands of your broker. In this case, you would have an unmanaged open trade.

If you’re in an area that has frequent power failures, you might want to look into opening a VPS (virtual private server) account. If you run your trading platform on a virtual desktop, you don’t have to worry about power outages or crashing computers. Your trading platform will continue to run wtihout you, and it can be accessed from any location.

Expert Advisors are definitely helpful tools. Do your homework and conduct some in-depth research before making your purchase and your experience should be a good one.

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Tags: Investments

This entry was posted on Friday, September 5th, 2008 at 2:46 am and is filed under Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.