How Does a Forex Expert Advisor Work

Can anyone make a living trading FOREX using expert advisor?… Forex expert advisors (EAs) are program codes which are designed to read the price feed from your data provider through your trading platform, and using algorithms which are looking for pre-programmed price patterns will make decisions following rules built into a decision tree which will assess the opportunity to either take a trading position or provide a trade/no trade recommendation for manual execution by the trader.

The more adventurous account holder will turn the EA loose to make the trading decisions automatically for him/her. Its success or failure to make money for the account holder is entirely dependent upon the skill of the person who wrote the code.


The three people who are assured to earn money from the EAs

Virtually all of the heavily marketed EAs are very adept at placing trades and if poorly designed will empty your account at an alarming rate. The three people who are assured to earn money from the EAs are ;

  • the guy who sold it to the wannabe trader and
  • the second will be the broker/dealer collecting the spread on each order
  • the third winner (and the biggest group) will be the people/institutions on the other side of your trades

For myself the implication of that question is will an EA possibly work for the reader? The short, quick and honest answer is NO.


Why would the developer ever sell it

Could anyone who really knows retail forex trading seriously believe that someone out there is going to sell you an automated trading program for $12.99 to $499 to $1999 to $4999 that will successfully make trades for you while you sleep and pile money up in your account?

If there was a program (or several) that would do that, why would the developer ever sell it, when he/she could just run the automated EA and make all the money they wanted?

The answer, of course, is that they can’t and they won’t.

Yes, there are automated systems being used on Wall Street (and in other financial trading centers) that are narrowly focused and will make profits for a while.

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But then the market parameters change (as they always do) and the software begins to lose money rapidly because the algorithms on which they are based stop working when the currency markets change.

Such firms employ armies of coders and programmers to quickly take the programs off line when that happens and  fine tune the algorithms, run the tests and when proven profitable for the changed circumstances, will put them back on line.

But the average retail trader has no chance of being able to afford to do that. There are trading firms on the Street that have entire floors of programmers who maintain these systems.

One of the most profitable areas in retail forex in the last several years has been to cobble together such a program, give it a catchy name, get a raft of “testimonials” and “proven trading account balance sheets” (can anyone here do Photoshop?…) and then pay an expert copywriter to cobble together a compelling sales pitch for a website.

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Such forex expert advisor software programs have proliferated in the last several years and have raked in hundreds of thousands of dollars in each such promotion from gullible and trusting wanna-be traders who believe the sales hype.

The hucksters of these programs have perfected the “art” of cross promoting to the collected email addresses among themselves and muliple sales of programs to the same traders from different promoters has been the norm.

Virtually every such EA that I have tested have very obviously been designed by someone who has never traded forex successfully. Many show a complete lack of understanding of the most basic rudiments of successful trading.

I know of no faster way to empty a $10,000 forex trading account than with a few well chosed EA trading programs turned loose on your computer and your forex account.

Can a novice come to the forex markets and make money consistently?….

Without question. But it takes training, study, practice and discipline.

The help of an experienced professional trader is invaluable and will save you hundreds of hours and many thousands of dollars.

I promise you that you will pay for your forex education one way or another. But you will not get the results you seek with a quickie software program for $97.00.

My advice?….

Don’t buy them, no matter how credible the claims and testimonials for such EAs may be.

Go find yourself an experienced professional trader that knows the business who will agree to be your coach/mentor and learn directly from him/her.

But please don’t waste your money or time buying EAs to trade for you…

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