Since computer programs are responsible for much of the trading activity in many major financial markets, retail investors choose to trade using algorithms。The benefits of moving to program-based trading can be particularly attractive, and some brokers have made it easier to take the first step in the process.。

This is where the Expert Advisor service from MetaTrader comes in, which allows traders with accounts in brokers that support the MetaTrader 4 (MT4) and MetaTrader 5 (MT5) platforms to develop their own programs or use programs developed by other traders.。Trading decisions can then be fully automated, i.e. how EA trading works。

History of MetaTrader EA Trading

Whether it's taking another person's idea, or a model built by a third-party computer programmer, it's important to conduct a registration survey to check if your sources are legitimate.。

The MT4 platform was first launched in 2005 and the MT5 launched in 2009.。These two platforms are the most popular Forex trading platforms in the world。Used by millions of traders every day, they have been thoroughly tested and now offer traders a reliable and powerful option。

Features designed to allow traders to integrate algorithm-based trading have existed since day one, so the "EA Trading" feature has also been extensively tested。The wise move for MetaQuotes Software, the owner of MT4 and MT5, is to combine its platform with a shift to programmatic trading across the market.。

In 2006, algorithmic trading accounted for only about 25% of forex market volume, but by 2016, more than 80% of currency orders were executed using trading algorithms.。The situation is similar in the stock market。In 2003, only 15% of U.S. stock market trading volume was algorithm-based, and by 2010, the figure had soared to 70%.。

Other markets can also be traded using smart trading systems, and stock indices and commodities in asset groups can be traded using algorithmic models。For example, with this user-friendly feature, someone with an MT4 account with broker IG can trade more than 80 markets using the EA。

MetaTrader Smart Trading System

As the reputation and credibility of MetaTrader EA trading is verified, it is worth considering how to make the most of the service。

The first decision to make is whether you want to use EA trading to create signals and trade manually, or set up your account so that the EA automatically executes trades on your behalf。

If you choose the fully automatic option, trade entry and exit parameters as well as stop loss and take profit orders can be included in the program。You can benefit from the full functionality of the MT4 / MT5 trading platform, but you don't have to stare at the screen 24 / 7。

Introduction to EA Trading

Once you've decided whether to trade semi-automatically or fully automatically, the next question is whether to trade with a model built using your own code, or download a ready-to-use model created by another programmer。

Building your own plan can be time-consuming, but it's also valuable。There are plenty of guides to help you learn how to make the most of the MetaQuotes language (MQL), or you can use a "wizard" to speed up the process。

EA programs can leverage data from multiple different markets simultaneously。If your model ultimately leads to trading decisions in EUR / USD, it can still take into account data points from markets such as gold, stock indices, or other currency pairs。When these signals coincide, your Eurodollar trade is booked。

Because the MQL community is so large, it is also possible to download and apply EA models created by other traders, some of which are free。Whichever you choose, it is worth noting that the new model can be run in demo account mode so that you can test its performance before trading real cash。

Backtesting (the process of running the model by simulating the market environment) is also possible and allows you to determine the trading performance of a previous period of time。This can be very time-consuming, and variables such as slippage may not be fully incorporated into the hypothetical performance results。Despite these challenges, it is a valuable part of the process。

Indicators used in EA trading

EA trading works by applying a series of yes / no rules for market conditions。A simple example is the use of the mean reversion technique in the GBP / USD。It can be applied to any time frame supported by the MetaTrader platform, scalpers focus on one-minute time frames and trend models using daily, weekly or monthly price charts。

Advantages of EA Trading

We have already mentioned that MetaTrader and Expert Advisor have been running for decades and are trustworthy from an operational point of view。Another benefit of this backstory is the online community that has developed around EA for many years, which is a great place to share ideas, ask questions, or crowdsource ideas。

Once you have come up with the idea of the strategy, just click the button to set the transaction to automation。This means you will take advantage of more trading opportunities as your account will trade while you are busy with other things。It also means you can focus on your daily work or lifestyle while still having access to the financial markets。

If you decide to buy and download the EA from other programmers, some of which have already been used by countless other traders。Don't forget, this route means you still rely on third parties to make the right decisions about your cash, but retrace from some of the available EA's track records and review history.。

One of the biggest benefits of EA trading is that it removes the emotions of trading。A key element of successful trading is having a clear strategy and discipline in execution。Creating a model is an ideal way to implement this method, of course, some monitoring is recommended。

It is also worth remembering that the EA service is very flexible, it can be applied to a wide range of markets, and there are models that suit your natural trading style。Whether you tend to resell forex or run a long-term stock momentum strategy, EA Trading helps you achieve your goals using algorithmic and automated trading。

Disadvantages of EA Trading

The features of EA trading are perfect for many people and can improve trading returns, but there are still potential pitfalls to be aware of。

A common fear experienced by all system traders is a "paradigm shift," which applies not only to models run by large hedge funds, but also to traders using EA。

Trading with algorithms requires confidence in your model and the ability to adapt to losing and profitable trades。The approach relies on confidence that the strategy is "ultimately" correct, thanks to all the backtesting done。However, if there is a paradigm shift, you could end up booking a losing trade after a losing trade and blasting your account before realizing that the model no longer works.。

The factors that may cause this disturbance are largely related to fundamental analysis and news events.。When unexpected political events such as war, oil price shocks and the Brexit referendum affect markets, computer models that are backtested during periods of relatively calm market conditions may become less effective。

One of the common misconceptions about algorithm-based trading is that the big quantitative funds that dominate the market trust the code so implicitly that they always run their own models。The reality is that human intervention sometimes happens and fund managers decide to shut down their models until "normal" conditions return.。

Mechanisms for conducting transactions also present challenges。The "slippage" describes the difference between the price a trader is trying to execute and the price they are actually paying.。Since prices change almost instantaneously, traders cannot avoid it: they are dealing with a constantly changing target, especially short-term strategies that may fail because the model cannot execute at the expected price。

Using a virtual private server (VPS) can reduce the amount of slippage. This method involves placing your model on a server close to the exchange so that low latency leads to more efficient trade execution。

VPS trading also solves another problem related to EA trading: it only applies to computers that are turning on。If you trade at home or on your phone and turn it off, your EA model will stop trading。

How to set up EA trading？

Most of the work related to setting up EA trading is related to the research and testing of models。In contrast, the process of setting up to use EA is very simple。

The first step is to sign a contract with a broker that offers MT4 or MT5 trading services。Thanks to the popularity of the MetaTrader platform and EA trading services, many of the best brokers on the market have done this。

Once registered, simply follow the instructions to download the MT4 or MT5 platform。This can be done on desktop or handheld devices, but EA is currently not compatible with the WebTrader format of the MetaTrader platform。

You can then create your own EA or download someone else's EA。

Conclusion

Most of the advantages and disadvantages of using the system trading model apply to all quantitative funds, not just MetaTrader Expert Advisor。algorithms occupy a very large amount of market activity, a fact that proves the attractiveness of this approach。This suggests that some programmers are doing the right thing and getting consistent long-term returns。

EA's user-friendly features make the process of developing the skills needed to become a member of this team easier。If you are interested, you can continue to learn more advanced programming。Getting started with EA is a good first step as it may involve you developing your own code or learning how importing code works。

No matter which route you take, backtesting is a great place to start your research。

Running the model in demo account mode is the logical next step。This gives a clearer idea of whether it may be profitable, but may not consider slippage - this is even more important if you are running a scalping strategy。

Building or buying a transaction model is the first part of the process, and continuing to trust it to trade real money is a big step。It is also important that you use a trusted broker。