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A Prop Traders’ Take on Expert Advisors

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As trading in the currency market may be a completely dissimilar experience for different traders, a single piece of advice may also apply differently across different people’s careers. If you feel that a specific set of instructions is not working out for you, while others seem to be doing quite well following the exact same steps, understand that there are more things at play aside from technical suggestions and tools.

Money management, trading mindset, and overall psychology sometimes seem to be the main determinants of one’s success, which are only topped up by their pristine routine and theoretical knowledge. In fact, some experts assume that whichever way you decide to go about with a specific currency, be that long or short, is by far less important in comparison to an individual’s money management skills. Naturally, traders may want to take all preventative measures to increase their chances of succeeding while decreasing their losses. Some other specifics of forex trading, such as entry points, can thus be perceived as an additional vehicle that could help traders ensure smooth trading in the spot forex market.

Even more importantly, the understanding that the means to becoming a successful trader are naturally diverse, which further implies that traders can always discover a new, easier method that could land them more pips than ever before. Due to supporting the maintenance of an inquisitive approach, this article covers the topic of expert advisers in an attempt to assess and present some important conclusions regarding this matter and provide forex traders with more opportunities to expand their vision concerning this market.

Forex expert advisors, or in other words robots, stand for a program created for the purpose of managing a trade more efficiently and earning more money as a result. Once plugged in any trading or charting software connected to a trader’s account (Metatrader 4 as the most widely used today), an expert advisor is meant to give signals and guide individuals throughout the trade on the basis of the program. The programmers behind these algorithms which are aimed at directing traders in their trades create codes that serve as a business plan. As code writing is a lucrative business, many seem to be interested in creating these programs and selling them for a particular fee despite not really knowing much about the market itself, which is unfortunately quite often the case.

As the aim of every trader is to establish a continual flow of income, this solution may seem like a perfect fit for anyone who is less impressed by the challenges of sitting long hours at the computer trying to grasp the essence of this market. Owing to high demand for any driver that could bring money with less effort, expert advisors have grown to become a large industry as they are now sought by many currency market participants. 

While market enthusiasts who can navigate the programs to their benefit may certainly exist, anyone attempting to secure their financial stability via code is advised to exercise caution. The best approach to discovering and using an expert advisor (or EA) includes properly conducted research and testing as any rash, blind purchase on a random website may turn out to be quite costly in the end, both literally and figuratively. Any product advertised online will typically have a carefully structured description that was designed in a way to appeal to a potential customer, so the manner in which a product is advertised does not necessarily confirm its effectiveness and efficiency. Many traders sharing their experiences with these robots online have seen the dark side of this business, as they claim to have tried a wide range of different EAs before disappointment sparked their interest in understanding the market and the tools better.

Some prop traders even seem entirely certain that finding a valid robot to manage people’s trades effortlessly on their behalf is rather arduous work, further stressing the importance of carrying out detailed research that would prevent any misfortunate outcomes from happening. The likelihood of getting hold of a good EA is, therefore, not impossible, yet the task itself is just incredibly challenging. Should you, however, be able to get your hands on one such good EA, a number of prop traders would assume that your battle for securing a stable money flow would then be over, as your program would in that case be providing you with stable wins in a row. 

The chapter of expert advisers then truly requires traders to challenge and analyze any EA that they come across, especially because, as discussed above, many codes have been written by programmers who possess little knowledge of the nature of forex trading. Whereas some experts in this market did think about atomizing their algorithms, they decided not to go along because they realized that the technical side is precisely that – a side or one side of the story, and how any trade they have ever entered required a fair share of intellectual work as well. Programs simply cannot account for this aspect of human existence or ability, which significantly reduces any program’s chance of being a sole tool for traders to rely on.

In addition to the human factor described above, there is another aspect of the spot forex market that a program of this sort is highly unlikely to track or take into consideration. As many traders already know, the currency market often undergoes many changes, so we go from periods of consolidation to quite volatile market moves, sentiment-caused reactions, and the impact of news events, among others. Unfortunately, these programs are often only designed to work properly under one such market condition, which could make any trader believe it is a work of art, but only for a while, that is until the market changes its modus operandi.

Many traders primarily seek this product so as to avoid the strenuous process of learning that naturally slows down the time span required to start making money from trading currencies. The desire to escape the reality of doing a job we dislike, living in underdeveloped countries, becoming rich quickly or any other reason that involves the need to rush things for that matter inevitably reduces traders’ odds of making their forex trading career take off. These are some of the main causes of failure in this market and most probably the sole reason behind the longevity of this robot industry. Prop traders, who are incredibly well versed in all aspects of the forex market, often describe the EA industry as a game for luring impatient individuals into falling for a scamp, may it be for at least a few months before they turn around and accept the sobering reality.

The pool of traders who display insatiable hunger for success never seems to be able to dry up, so in order for you to take necessary precautions and protect your finances, you should note down several key steps to follow before signing any contracts or paying some of your money. One of the first and most important points to consider includes results, as this is essential data that many companies omit in their product descriptions.

Actual numbers and tangible results are vital and they ought to back up any convincing story used for advertising a program of this kind. It is interesting how these same products are still sold despite the lack of quantitative information that traders should seek prior to the purchase. If you just quickly investigate these companies with your browser now, you would be able to discover that traders are mainly asked to trust the program and the selling company rather than form their opinion based on some real evidence. 

Aside from evidently refraining from supporting their claims with numbers, these EA selling companies also often use quite manipulative tactics to blur traders’ vision and trap them quickly before they figure out the true nature of the product. These sly maneuvers frequently entail adding a spreadsheet with numbers that have no realistic grounds. The companies often insert the data that they create freely and present them as real evidence of a product’s quality. So, should you see any factual information concerning the number of pips produced in a month, you should really think twice and seek to find more information about the company and the product.

In spite of their fraudulent nature, these companies seem to be in the clear when it comes to penalties and punishment. The fact that such companies can simply get away with these activities can be connected to their country of establishment, which are typically either quite far away or do not need to obey international law.

Playing with numbers is unfortunately only one of many different manners the robot industry can trick traders – for example, any such program can be created in such a way that traders are presented with some unbelievably good, blow-out-of-the-proportions data, when in fact the money management was just tweaked to exaggerate any wins. What is more, these programs can also be developed so as to only show you the wins, while any losses are simply not included in the calculation. While the information on the wins may even prove to be legitimate, the number of hidden losses may substantially exceed the wins. 

Some sellers may decide to show you a top-winning robot based on having a large number of accounts and different robots running on each of them. Some others may try to lure you with a promise of earning a staggeringly high number of pips which is simply impossible in reality. These linguistic games also include presenting information on an impressive return that is, unfortunately, a product of overleveraging, which only tells you that the risk of your account being wiped out has increased instantaneously. These tricks are numerous, yet the companies will see your account go down and it is not them who will have to worry about the consequences, which is why every trader needs to make sure that he/she obtains all the information in advance.

Strategies such as Martingale, for example, make traders double up every time they lose until they finally win, which is followed by a break-even, offering them to keep all their wins. Alas, if this approach led to anything good in the long term, people would not be losing their houses in casinos. In addition, some other sources that once used to be credible, such as MyFXBook – a website used for tracking results, are no longer classified as trustworthy due to alterations done intentionally to get to traders. Therefore, anything offered so freely, disguised under the “genuinely altruistic” or “highly efficient” tag, has probably been compromised for the purpose of amassing a fortune on the basis of your misfortune. 

 As invested and deep researchers of all matters pertaining to the spot forex market, prop traders are likely to leave room for finding an EA that actually works well and does not conceal any valuable information. Nevertheless, even if you believe that you have found “the one you have been looking for,” give yourself the benefit of properly (forward) testing it before you actually invest real money.

The best and the safest way to acquire in-depth knowledge about your program of choice is to use your demo account and really invest your time and effort into assessing this product over a longer period of time. Traders may need a minimum of one month before they are able to see how these expert advisors operate, which is why extending this testing process to a few more months, without feeling scared of investing since fake money is used, may be the wisest decision before committing to tying your real account to one of these programs.

The percentage of dissatisfied customers is said to be extremely high among the group of traders who have purchased and used these programs in the past. The one way you can protect yourself against the robot industry’s creative tricks is to carry out extensive research and maintain a degree of suspicion regardless of the testimonials or results that the related companies may present on their websites. Should you decide to indulge and purchase one of the EAs whose advertisement you found to be credible, you should definitely demo test it and track the results for a period of one month at least. Only once you have accumulated the results you are satisfied with can you actually move on to plugging the EA into your real account, and rather invest small before confirming the previous success with your real money.

Lastly, in spite of the ease that the possession of such a program could bring about, these quick solutions, and most importantly the need for the psychological hunger to progress fast, may not be the road worth taking long-term. Rather choose to be a good trader in control of your account than hope for wins and rewards will follow naturally. In case you find an EA that works long term, if it adapts to new market conditions, if it has sound risk management implementation, use it as much as you can but still be ready for sudden losses your account should endure. When all is said and done, the search for a great EA could be as time-consuming as making your own manual trading algorithm minus the trading experience, which is irreplaceable. 

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