Automated trading is a trading style that’s been widely accepted nowadays thanks to the revolution of trading. Traders are being more interested in the use of a mechanical trading system and expert advisors. But for some reason, a trader might get too confused about the expert advisor to use in their MetaTrader 5 trading platform, especially those who are still new to the market in the midst of all the variations and different types. So, how should you use auto trading in Forex? How to pick the right EA?
The Use Of A Trading Strategy
Will you be using the trend following system? Or the sideways trading system? although these questions are quite simple and left unanswered most of the time, these questions will be your basis for finding the best expert advisor that will complement your needs as a trader. Most traders are looking directly at the price of the EA and the backtesting method rather than focusing on these basic questions.
There is a clear difference in the trend following EA than a simple EA that trades in the sideways market. There are also ideas arising that claims prices tend to trade sideways according to the time frame that you are viewing. That goes to show that the differences are not hard to determine whenever the trader seeks to find an expert advisor.
Time Frame
Another question to answer when determining the right expert advisor to use when trading is the time frame. There are a lot of traders that use a certain expert advisor in different time frames. They hope that if they do so, they get a higher chance of winning. But this method only compromises your trades. Using a specific expert advisor in different time frames that were supposed to be used for a specific time frame will only make it useless. The time frame is very important when choosing an expert advisor because when you start using an auto trading software in Forex, you ought to make additional investment for the purchase of a VPS so the trading strategy that you have can work effectively round the clock. But you still got the option to avoid these additional costs if you choose a trading software that can work exceptionally when at peak market hours.
Money Management
Thanks to the latest innovations on Expert Advisors, they have become more configured and traders can now choose to use their personal money management strategy. Another factor to be considered is the number of trades that you want the trading software to do. If the EA is only able to apply a 1% rule, then it would be too risky to use it on multiple trades as this could hurt the overall results.
Forward Testing Plays The Most Important Part
Most traders tend to look at the backtesting results before they buy the automated software. But, they are missing something. It is so much better to purchase trading software in MetaTrader 5 that has been forward tested before anything else. There are a lot of EAs nowadays that do not have a right forward testing history.