Regardless of the trading software, there are some basic understandings one needs to have:
Good understanding of the system especially its strengths & weaknesses. There is hardly any trading software without one weakness or the other.
Understanding of these strengths & weaknesses will help you to know in what type of trade to use it. It will also help you to determine if you can manually make adjustment into any of its trading specifics if the system allows such.
The currency pairs it is designed for.
There is hardly any software that can trade all the major currency pairs. This should be well clear to all seasoned traders. The fact is that many currency pairs have one certain pecularity or the other. Many of these differ from pairs to pairs.
The trading time-frame.
An understaning of expert advisor logic and forex market volatility will make one to appreciate this important fact. Each system has its own trading time-frame - one hour, two hours etc. Having this at the back of your mind coupled with your knowledge of the forex market in respect to that particular currency pairs will guide you in entry and exit moments.
This refers to its account usage (percentage it trades with), entry & exit, stop-loss, take-profits etc. A good understanding of these will definitely help your trading to be profitable.
Performances under various market conditions.
These market conditions include volatile ones, ranging market etc. A good EA should have an in-built logic to overcome and surmount these various situations. So, when next you to use an EA, be on the watch-out for its performance under these conditions.
Verification of their claims.
Try as much as possible to verify the claims of the promoters of the EA.
Apart from these basic understanding, the use of EA requires:
Good knowledge of the forex market, the particular currency pairs and economic issues.
Many traders especially newbies have wrong notion that the use of EA replace these. The truth is that why EAs offer you a kind of leverage, they cannot completely replace the required basic knowledge you should have. It is on this knowledge that you leverage on through the use of EAs and not just relying blindly on them.
Objective evaluation - this should be by you and others.
There are many sites on the net where you can get independent results of the performance of EAs. One of such is ForexAutoTradingReviews. You can also try Forex-Robot. Check Wealthcreationseeds for list of EAs you can use.
Another way is to make use of experienced traders. Some would have used it before and their experience can be of tremendous benefit.
Forum participation offers you a very good opprtunity in this respect. You can discover many things about EAs on forums by reading posts, comments or even asking questions about them.
If you are new to Forex, you can start trade with EA under the guide of your tutor - experienced trader.
Good demo trading
Learn to demo trade with EAs before deploying them. This should be done in line with your own trading system and check out for consistencies with yours.
Limited use –
EAs are not to be used for indefinite time - Many who claim to have problem with one EA or the other usually come short of this. To enjoy trading with EAs, you should work out trading time and system for them and not be tempted to put them on forever.
Also, many EAs’ performances dwindle with time. Watch out for this and be ready to change them or upgrade as the case may be.
Limited use of account – It is good you use your own judgmental skill to determine what percentage of the account the EA should trade with at any time. In fact, as a matter of caution, beware of any EA that you cannot adjust any of its trading set-up specifics especially in aspect of usage of account.
While trading with EAs is quite good and profitable, it is good you have these at the back of your mind:
- they are just mere soft-machines.
- their usage requires certain basic knowledge and skill.
- they are likely to lose trade once in a while.
Remember, there can hardly be any 100% winning system, whether manual or automated.