A Forex Expert Advisor (also know by other names such as Forex Trading Robot, EA, MT4 EA, Automated Forex Trading Software) is a mechanical trading system written in the MQL-4 programming language and designed to automate trading activities on the MetaTrader4 platform.
Hundreds of brokers and system developers are enticing new traders into trading the Forex market with claims of double digit or higher returns in a short space of time by using MetaTrader4 automatic trading systems, called Expert Advisors. The reality is that 95% of new traders lose their trading bank in the first couple of months. How can you ensure that you are part of the successful 5%?
Here are 10 tips that can help you achieve quick success when first starting off as a Forex trader.
- Get familiar with the Forex market. You can’t possibly hope to successfully trade a market that you do not understand. Don’t listen to all the hype that “newbies” can buy an automatic system and be successful immediately. The Forex is a very exciting market but you need to read and learn about this beast before trying to trade it.
- Purchase a commercially available Expert Advisor (automatic trading system) that offers a user support forum. There are systems that you can get for free, but if you are just starting out you should consider purchasing a system that provides good customer support and also offers a user forum where you can read about the problems and the solutions encountered by fellow traders.
- Choose the system before you choose the broker. Different Expert Advisors trade on different currency pairs and different brokers offer different spreads. Once you know exactly what and how your system will be trading, you can then shop around for the best broker.
- Choose a reputable broker who offers the MetaTrader4 trading platform free. There a literally hundreds of brokers now offering MT4, but some are more reputable than others. Only choose a regulated broker. User forums often contain discussions on broker performance.
- Learn how to use MetaTrader 4. Make an effort to fully familiarize yourself with the trading platform so that you can set up your Expert Advisor up correctly and not make silly parameter errors. When in doubt, read the manual.
- Know the difference between fixed and variable spreads. Some brokers offer fixed spreads and are usually market makers. Other types of brokers, like ECN brokers, offer variable spreads. Make sure you understand the effect this has on how your particular system trades as it can have a significant impact on your returns.
- Experiment with micro lots when breaking in a new system. Brokers offer a range of lot sizes – there are standard mini and micro lots. Make sure you know the difference before you trade and choose only a micro lot account if you have a small trading bank or are just starting out with a new system.
- Open a demo account. Most if not all brokers will offer a demo account which you can practise with before risking real money. If you are trading a new system or are new to trading it is a good idea to experiment for a period on a demo account first.
- Start trading with small risk. Ensure you understand the value of each pip for the currency pair(s) you trade in your new system. There are pip calculators available on the Internet that will provide this information quickly for you.
- Never get greedy. Never raise your risk above the recommended levels for the system you are trading. The user forums are often a good source of commentary on risk levels for a particular system.
Conclusion: Choosing the right broker and the right type of account is just as important as choosing the right system. If you need more help in choosing the right system, check out the live results and detailed reviews for top selling systems on ForexRobotShop.com