How to Compare Forex EAs
In the world of forex, an expert advisor is a thing and not a person. Expert advisors, known as EAs and forex robots, are computer programs which automate trading. They can be free or they can cost anything from under $100 to thousands of dollars. Some purveyors might put a very good-looking website together around an EA that was not very profitable. Such a type of EAs can be used for spread betting.
At best, EAs can be highly effective, as anybody who has played chess against a computer can confirm. An EA is not greedy or proud, does not feel pressure no matter how uncertain is a market, will stick to the plan regardless, and operates 24 hours a day.
A human cannot monitor several indicators, pivots and fibs as well as support and resistance levels and make a correct trading decision in a split second. Some studies have concluded that investors fail due to erroneous analysis. EAs can make forex trading considerably less painful by handling repetitive tasks. As a result, forex EAs have become essential to many currency traders worldwide. Some traders have reported great improvements in not only productivity but also the bottom line. Most EAs run on the MetaTrader 4 platform, which is the most popular.
If you choose to purchase an EA, it is wise to select one which has a comprehensive money back guarantee. The best EAs would permit you to test a program using a practice account.
A basic comparison of EAs can be performed by dividing them into categories. The first kind is the news-based advisor, which attempts to take advantage of breaking news or massive shifts in currency pairs. Scalping is trading with movements of no more than five pips for short periods of usually no more than a minute. The number of trades is high and lends itself very well to automation. Breakout-based expert advisors conduct trades when the price of a currency pair breaks through support or resistance levels. Hedge-based EAs will open two separate, contrasting positions in an attempt to minimise loss.
Adaptive EAs are a new development which responds to different situations and trends and is based on neural networks, as is the human brain. Classic EAs enter trades whenever a high probability set-up appears to be in the offing. Usually, they come with trailing stop, so profit is assured.
Forex EAs can be compared by reading online reviews, which often feature tables which compare EAs. If an EA is good, this fact will be attested to by an uncountable number of users. Magazines are more respectable sources of information. World Finance Magazine declared 4XP to be the Best Broker of the Year in 2012. The result was obtained after a vote by 40,000 industry leaders and magazine readers.