What is an Expert Advisor?

Foreign exchange (FX) trading does not always go well, and can be frustrating at times. Some Forex traders can become greedy or fearful, and for this reason, they are often inclined to make bad decisions that can negatively affect their accounts. One way to avoid this problem would be to use an Expert Advisor, or EA.

An EA is an automated trading system, which automatically opens and closes trades based on pre-established rules.


The first question is: what is an Expert Advisor? As mentioned above, an EA is an automated FX trading system. In MetaTrader, it is written in the MetaQuotes Language 4, and is developed for use in the MT4 and MT5 trading platforms.


EAs can be programmed to automatically generate trading signals and notify you of trading opportunities. Another type of automated trading system is a Forex robot which, like an EA, is a program that can identify market patterns and generate trading signals. However, unlike an EA, a Forex robot can automatically trade on behalf of a trader. An EA, on the other hand, will always require a trader to manually authorize a trade.


Each Expert Advisor relies on pre-established rules, but EAs may differ in the rules they follow for trading. As with any automated software, they reduce the possibility of making emotional and irrational trading decisions, which commonly affects novice or inexperienced Forex traders. A Forex Expert Advisor follows a very strict and consecutive plan, free from any human intervention.


Before describing the functions of Forex Expert Advisors, we would like to outline the four types of Expert Advisors you may encounter:


– The News Expert Advisor – as the name implies, the main purpose is to take advantage of various news events and large price movements that can take place during large press releases.

– The Breakout Expert Advisor – is specially designed to open a trade when a price breaks through preliminarily determined levels of resistance and support.

– The Hedging Expert Advisor – this category includes any Expert Advisor who plays two respective and opposite positions, decreasing the loss of one while facilitating the gain of the other.

– Scalper Expert Advisor – such Expert Advisors pursue the goal of securing small gains once they are available. EA will open and close an endless number of trades for any profit, so your Expert Advisor could trade up to 400-500 times a day depending on market conditions.


The best Forex Expert Advisors can be programmed to work in multiple ways (for example, using a selection of technical indicators, such as the moving average indicator, or the MACD moving average convergence/divergence indicator) or looking for trends and necessary breakouts.


By applying these various indicators, EA can analyze the market, as well as the behavior of the various financial instruments, and can generate a signal about trading opportunities.


EAs are similar to Forex robots, which are another type of automated trading software. When using strict definitions, the difference between an EA and a Forex robot is that an EA will generate signals, while a robot will trade without the need for manual approval. However, the terms are often used interchangeably, which means that many so-called Expert Advisors are capable of much more than generating signals.


Some Expert Advisors are designed to take full control of your account. The idea here is that you will look at your current account balance, before deciding how much of your balance can be put at risk.


XFX Group is an expert in Expert Advisor programming, you can view our system statistics on MyFxBook or see our products.

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