An EA or an Expert Advisor is an automated Forex trading system that can automatically trade on behalf of you based on some preset rules and instructions fed to it. It is ideal for novice traders and experts as well because it allows people to carry out trade even when they cannot attend the market. There are many options available for you to choose from, but the best EAs allow traders to automatically trade, without demanding their interference or compulsory presence.
However, traders need to keep in mind some things and apply certain tips and tricks in order to get the best out of their robots.
Here are some tips to help you as a trader improve the performance of your EA:
1) Analyze the market conditions
Analyzing the market is a crucial task when it comes to the whole trading game. The Forex trading market keeps changing often. This means in order to ensure that your Expert Advisor optimally performs, it must know how to adjust to the changing market. But it is close to impossible to build an EA that works in all conditions and adjusts to all changes in the market. What is possible is for you to build an EA that is specifically designed for some conditions. Switch on that EA when such conditions prevail. For example, when trading is based on market trending run an Expert Advisor that is intended for trending markets.
2) Make use of non-correlated Expert Advisors
You are already aware that building a universal Expert Advisor is not practical. One EA cannot perform ideally in all market conditions. Therefore, you must operate multiple Expert Advisors across distinct timeframes, strategies and currency pairs that are also distinct and not correlated to one another.
The more you increase the number of non-correlated and distinct EAs, the stronger your trading abilities get, since several types of market conditions and changes can be taken care of. It is best advised to create a situation where one EA counterbalances the performance of another. This results in a steady equity curve growth. For example, if you have an EA that works in short term then you must build one that works on daily charts.
3) Keep an exit strategy handy
You never charge into a battlefield without an exit strategy. Similarly, you must keep an exit strategy handy in order to handle changing market conditions in the best possible way. Adverse situations like your Expert Advisor getting caught in a breakout or becoming the victim of a short squeeze needs pre-planned exit strategies.
4) Allocate funds based on the performance of the Expert Advisor
A very valid question often pops up inside your head as a trader and the question is how much funding? You may be wondering how much funding you should allocate to a system, which will determine whether you reach your objectives or not. If you have an ideal system but the allocated funding turns out to be the wrong amount, it does not benefit you in any way which is a very common mistake.
You must allocate the funds depending on the performance of the Expert Advisor. A high performing robot requires a larger sum of funding than compared to a lower-performing Expert Advisor. This is the discretionary element of trading that can have an enormous impact on your profits.
5) Be familiar with your MAE and MFE
MAE stands for Maximum Adverse Excursion and MFE stands for Maximum Forward Excursion. Being familiar with these two aspects can prove beneficial when it comes to improving the performance of your system. Your MAE is responsible for letting you know to what extent your trades go into the negative territory before turning profitable. While your MFE helps you understand to what extent your trades go into profit before entering negative territory.
6) Diminish your MT4 workspace
Execution is vital as it differentiates a profitable trade from a non-profitable one. One way to get better execution is by diminishing the number of windows open in your MT4 workspace. It is best advised to shut down all charts and market watch windows that are not in use. This is because these windows tend to be fairly data concentrated features of the platform.
7) Reduce trade size during the drawdown
If your EA is suffering a drawdown, make sure to reduce the size of your trade. Reducing trade size improves the system. You must attempt to get to know your Expert Advisor and get familiar with what to expect from it and when it begins to go through a losing period, reduce your trade size.
8) Lessen costs by trading on a low spread account
Lessening your costs is one of the simplest ways to improve the performance of your robot. High spreads are harmful because they reduce your profits and offer higher losing trades. Hence, you must find a low spread with a commission option that is best suited to EA trading.
9) Use co-located Virtual Private Server
When you use co-located virtual private server or VPS, it allows your EA to operate on your broker’s computer, eliminating all sorts of delays in the execution of an order. This is possible because your EA is installed in a computer at your broker’s data center which can be conveniently accessed by you through the internet. Co-located VPS not only decreases any latency but also offers dependability when compared to operating your EA on your personal computer.
10) Practice backtesting your strategy
When strategies and trading systems are on paper, they typically look promising. But it does not mean it translates in the same manner when it goes live. This occurrence can sometimes take place due to poor pricing data or due to the poor design of the system. It is your responsibility to make sure that you trade with the same data on which testing of the strategy was carried out.
Now, that you are well versed with all the top tips you need for improving the performance of your Expert Advisor, go ahead execute them. Once you execute one or more of these tips you will notice a significant bump in the performance of your Expert Advisor. So, enjoy a less stressful and smarter trading system.