Expert advisors: As traders, we live in a world dominated by automated trading. About two decades ago, robots were behind humans when it came to negotiate, but now the reality is that the trend has changed, with the robots head. However, I can speak 3 reasons why you should NOT use expert advisors when trading with your account.
VPS costs
An expert advisor is basically a instructed to buy or sell when specific conditions are met robot. Its programming is relatively easy and anyone with knowledge in IT should be able to adapt to MetaEditor or any other programming tool available for free.
Before developing an expert advisor, one needs a strategy that will stand the test of time. This can be done in two ways: either by controlling a posteriori the strategy History to see what results offered in recent years / months, or just follow the strategy for some time to see if it works. Assuming that both steps are completed and the expert advisor is ready, you should know that apply to a broker / graphic is not enough, because at the time the platform / computer consultant expert simply cease to be closed operate. To overcome this, you need a VPS (Virtual Private Server or Virtual Private Server).
A VPS is a computer in a separate place that ensures that the trading platform will not be closed during the trading week. It is actually supposed to VPS never closed unless there is some unavoidable technical problem. To access a VPS, you must open an account at one of the VPS providers , pay a monthly subscription based on the needs of server and follow the instructions on how to make the most of the VPS of your choice.
Using a VPS is a good way to overcome the problems associated with the trading platform, but to consider monthly costs to be deducted from the profit that will produce the expert advisor, assuming no profit!
Execution and spreads
Operate with an expert advisor needs to have a broker and brokers differ greatly. The usual differences are the spreads offered and execution speed. Spreads change in volatile markets or when key economic events such as the NFP report (NFP) US is published. If your expert advisor is scheduled to open or close a trade during the publication of NFP data or just after, then the input or output level will be different and the results will not match the test.
Execution is also important. Let ‘s say the robot has the stop loss for a long position 10 pips below the current market price and important news is published. Due to the ECN (electronic communication network) using brokers, it is virtually impossible for a broker to cover the order exactly at the desired level. Therefore, the present closure is further. Thus, the test results will not match reality.
Lack of Market Conditions
However, none of the above will be so problematic for the expert advisor as lack of market. What does this mean? The Forex broker is required to fill an order if there is a market, which means that if you sell, there should be a counterpart to buy, or if you buy someone should sell. That’s a market. What if there is no one to buy your order for sale or to sell when you want to buy?
You could say that is not possible in Forex trading, but recent history tells us that things are not always as they are supposed to. Last January 2015, the Swiss National Bank (SNB) removed the link from EUR / CHF 1.20 creating unprecedented chaos in the Forex industry. Brokers went bankrupt, businesses were detained and the whole industry went into shock.
If it turns out that you had an expert advisor buying the EUR / CHF before breaking the floor of 1.20 and had stops slightly below 1.20, then no broker in the world would have helped because there was simply no market after eliminated the minimum floor price. In fact, for a few minutes (5-10 minutes) nobody knew the real value of the EUR / CHF because, again, there was no market. There were no buyers for sales orders to close long positions. So the expert advisor would be obliged to extend long until a market is formed.
The problem is that the market was formed around the level of 0.8700, which would have been the level where the expert advisor would have closed long positions. That would mean that the expert advisor would be giving ALL possible previous earnings in the year and would not compensate the loss, demonstrating why operate online Forex expert advisors carries risks when used.