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Expert Advisors - Pro's and Con's

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Running a robot or an expert advisor on a trading account may seem like an easy task and the solution to trading, but it is not necessarily the recommended way to trade. There are multiple things to consider as it has both advantages and disadvantages.

Advantages of Trading with an Expert Advisor

The most important thing is that emotions are left out of the equation. When trading with an EA (Expert Advisor), the outcome is already known.

Backtesting results show the possible drawdown to be expected as well as the future performance. Therefore, emotions are not influencing the outcome of a trade.

The trader is the actual enemy to the trading account as mistakes are made when either greed or fear interfere in the trading decision process.

It is not the same when trading manually. In a swing trade, for example, or when riding a trend, the trader will be tempted to either close the trade too early or keeping it too long.

They say that letting winners run is the best piece of advice to a trader, together with cutting your losses. This is correct, but it is easier to be said than done.

Besides emotions, another thing to consider is the number of trades taken. Most of the retail traders, if not all of them, are technical traders.

This means they base the trading decision on a set of technical indicators, like oscillators or trend indicators, or a trading theory, etc. If you find the right setup that gives a nice outcome constantly, you’ll find that you need to put in the screen hours to be able to trade the signals.

But this is not enough, as stress intervenes, the trader gets tired and cannot sit in front of the screens all day. A trading robot is a solution to all these problems, as it will operate as long as the market is open.

Disadvantages of Trading with an Expert Advisor

The biggest disadvantage is that trading with robots is misleading. You may find the right strategy to trade, it can have wonderful back-testing results, and when you put it on a currency pair to trade it will start losing money.

How is that even possible? The explanation comes from different conditions that cannot be incorporated when coding the algorithm.

A simple fact like changing the broker or doing the testing in a demo environment could be enough to affect the performance of an EA. In other words, the robot must be optimized based on various aspects, two of them being the ones mentioned above.

Speaking about optimizing an EA, overoptimizing one will end up in missing good trades. Overoptimization is the reason why most of the robots fail in the end.

Another thing to consider is updating the robots. It is not like you’re placing the robot on a currency pair and on a trading account, set and forget.

Trading with a robot implies a lot of testing, updating, improving the coding, optimizing the conditions, and so on. And then start again, and again, and again…In the end, it is as time-consuming and as demanding as trading manually. An expert advisor will result in the trader not paying attention to details anymore. Trading should be the result of both technical and fundamental analysis, and a classical EA will consider only the first part.

Ignoring the second one can be lethal. The best example comes from the Swiss National Bank (SNB) when it dropped the 1.20 peg on the EURCHF pair.

For a few years, the SNB pegged the value of the Swiss Franc (CHF) against the Euro at a rate of 1.20. The CHF is a currency pair that is being bought as a safety net against risk aversion situations, and the central bank wanted to avoid a further appreciation by fixing the rate against the Euro.

The problem was that the SNB dropped the peg suddenly and for a few moments/minutes, there was no market what so ever on the CHF pairs. Keep in mind that the broker is obligated to fill an order when there is a market.

When there’s none, it will fill it when a market appears! In the case of the EURCHF, even if you had a stop loss at 1.20 or just below, by the moment the peg was dropped, the next level was 0.88 or so.

In other words, the stop loss did nothing to protect the account and the next thing is that the funds in the trading account were lost, plus some more. If you traded the EURCHF with a robot or expert advisor, there is no way the robot can be set up for this kind of situations, and a heavy loss will be taken.

This is the major disadvantage when trading with a robot: one cannot react quick enough when things are moving too fast or when unpredictable becomes the norm. Throughout history, there are plenty of examples when a market made huge moves in a blink of an eye and even if a robot was in place with a specific stop loss, the execution was most likely bad, as slippage will ruin the trade.

In recent months, the GBP pairs collapsed in one Asian session, for apparently no reason at all. The GBPUSD pair moved over one thousand pips in a matter of minutes, with the initial drop happening in milliseconds.

No robot in this world can get you out of such a move at the right time, at the right place, at the desired level. These are things to consider when trading with robots and, while they do have plenty of advantages, if they fail only one time, it is enough to ruin everything.

All in all, I guess it depends very much on the type of a trader one is. If you are a control freak, it is unlikely to be comfortable trading with a robot.

If you are used to delegating, then automated trading is for you. One thing should be the cornerstone of any trading decision, manual or automated one: losses can occur at any time and it is normal for that to happen.



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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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