Many of us, when we start out trading try to look for short cuts tosuccess in trading. And one of the easiest ways to make money seems liketo go for EAs (short for expert analysers). So what are EAs? EAs are programs which are written to trade automatically. They are mainly used in MT4 platforms but now many other platforms have started supporting programs for auto trading.
So how does this work? You can program your trading platform to buy or sell under certain conditions. The conditions can be anything. It can be as simple as 'buy if price goes below 1.1000' to something as complicated as 'buy if 10 ema crosses 13 ema and MACD value is 1' or whatever. The indicators used in your platform can be called as functions by the program and parameters can be passed to it, indicator values can be returned for the parameters passed and then a buy or sell can be executed. It can also be programmed to give a audio or visual alarm when the trading signal appears.
The EA is the height of automated and mechanised trading. Nothing can beat it. No human intervention is required and everything happens mechanically. This has both its positives as well as negatives. The biggest positive is the emotional turbulence and hence the confusion of a human mind in trade is avoided. Since there is no human intervention,errors like seizing up when a signal is there cos you are too scared,taking profit early, refusing to execute a stop loss cos you somehow feel that the position will come back and other human errors born out of emotion can be avoided. The negative of this is the same as the positive. Just as being mechanised totally is good in a way, likewise,too much automated trading is not good. Whenever a signal is generated,there needs to be an analysis of the background of the signal, the market conditions, market sentiment etc before you enter a trade. Blind following of the signals will eventually lead to a huge loss.
Enter any discussion forum and you find that there is a huge demand for EAs. Why? Cos people are lazy. They just want to sit back and relax while all the money is made automatically by the EA. But they fail to realise that nothing in this world comes easily, without doing any work.Nothing wrong in using an EA but atleast an effort should be made to understand what is happening in the EA, how it works, when it works,when does it not work. etc. No EA will work under all conditions and at all times. So a thorough study of the EA needs to be made to understand what happens in the background so that the EA can be correctly controlled at important points of time so that its power can be utilised to the maximised extent.
My request to all new traders is to spend some time in forex. Spend sometime understanding how forex works, how the market works, how the indicators work, how the trading systems work, how EAs work etc. Spend lot of time studying. Nothing in this world is got freely without hardwork. There are no freebies in this world. If it looks like one, then it surely aint. So work hard, sweat it out, learn it the hard way. That is what will make you consistently successful.
So how does this work? You can program your trading platform to buy or sell under certain conditions. The conditions can be anything. It can be as simple as 'buy if price goes below 1.1000' to something as complicated as 'buy if 10 ema crosses 13 ema and MACD value is 1' or whatever. The indicators used in your platform can be called as functions by the program and parameters can be passed to it, indicator values can be returned for the parameters passed and then a buy or sell can be executed. It can also be programmed to give a audio or visual alarm when the trading signal appears.
The EA is the height of automated and mechanised trading. Nothing can beat it. No human intervention is required and everything happens mechanically. This has both its positives as well as negatives. The biggest positive is the emotional turbulence and hence the confusion of a human mind in trade is avoided. Since there is no human intervention,errors like seizing up when a signal is there cos you are too scared,taking profit early, refusing to execute a stop loss cos you somehow feel that the position will come back and other human errors born out of emotion can be avoided. The negative of this is the same as the positive. Just as being mechanised totally is good in a way, likewise,too much automated trading is not good. Whenever a signal is generated,there needs to be an analysis of the background of the signal, the market conditions, market sentiment etc before you enter a trade. Blind following of the signals will eventually lead to a huge loss.
Enter any discussion forum and you find that there is a huge demand for EAs. Why? Cos people are lazy. They just want to sit back and relax while all the money is made automatically by the EA. But they fail to realise that nothing in this world comes easily, without doing any work.Nothing wrong in using an EA but atleast an effort should be made to understand what is happening in the EA, how it works, when it works,when does it not work. etc. No EA will work under all conditions and at all times. So a thorough study of the EA needs to be made to understand what happens in the background so that the EA can be correctly controlled at important points of time so that its power can be utilised to the maximised extent.
My request to all new traders is to spend some time in forex. Spend sometime understanding how forex works, how the market works, how the indicators work, how the trading systems work, how EAs work etc. Spend lot of time studying. Nothing in this world is got freely without hardwork. There are no freebies in this world. If it looks like one, then it surely aint. So work hard, sweat it out, learn it the hard way. That is what will make you consistently successful.
