The journey of forex trading doesn’t always run smoothly, and even the most successful traders will experience some bumps in the road. This is especially true for traders who opt to head down the manual trading route, ignoring the automated processes that can aid their trading. Although automated trading does have its drawbacks, any trader can exhibit tighter control over their currency-trading portfolio through such means, particularly when they use expert advisors (EAs).
Considering the positive impact that an appropriately used EA can have on anyone’s trading efforts, the following takes an in-depth look at how to install and use an EA on MetaTrader 4.
What Is an EA?
An expert advisor is a software tool that forex traders can use to identify trading opportunities based on promising signals. EAs are similar to forex robots in that they are used to automate market pattern identification and generate valuable trading signals, but EAs differ in a key way: Whereas a forex robot is able to automatically make trades on your behalf, an EA can’t automate actual trades.
Instead, an EA functions as an intelligent advisory tool that offers recommendations but still requires the trader to execute any proposed trades. These EAs can be found through the MT4 or MT5 trading platforms, but you can also build your own to fit your trading strategy.
Advantages of Using EAs in Forex Trading:
- 24/7 Research: EAs conduct continuous market research, allowing traders to capitalize on opportunities that may arise overnight.
- Strict Trading Strategy: Well-designed EAs enforce a disciplined trading strategy and parameters, removing emotional bias from trade evaluation.
- Convenience: Integration with MT4 and MT5 platforms offers convenience for forex traders.
Disadvantages of Using EAs in Forex Trading
- Rigidity: The rigidity of EAs can limit their ability to evaluate trades beyond predefined parameters or incorporate essential market information.
- Uncertain Profitability: There is no guarantee that an EA will deliver consistent profits over time, especially when creating a customized EA based on personal trading strategies.
- Variable Performance: The performance of an EA can fluctuate unpredictably, leading to dramatic swings in performance and potential illusions of success during demo testing that may not translate to live trading success.
What You Should Know Before Using an EA
If you’re interested in incorporating an EA into your trading strategy, the most important thing to remember is that you shouldn’t start using an EA with live trades until you’ve had time to practice and become comfortable with this trading tool.
Even though performance can be difficult to evaluate over a limited sample size, practice through a demo account will give you an opportunity to become familiar with your EA and figure out how to best use it in support of your trading strategy. If you’ve created your own EA, this is also an opportunity to test-drive your own creation and identify potential amendments you want to incorporate before taking your EA live.
You can also use this trial period to determine how you want to balance the guidance of your EA against certain variables and data points it can’t account for. Even the best forex EA, for example, can’t take political or news-related variables into account when identifying trade opportunities. As a trader, you’ll need to balance any recommendations this tool offers against the potential implications of events beyond its view.
Creating an EA
Let us tell you: Creating your own EA is not the easiest task—there is a reason why there are lengthy courses related to the process. However, thanks to software shortcuts and various coding templates, anyone can create a basic EA. Helping you get up to speed, creating an EA in MT means understanding the coding structure of an order, along with grasping MQL4, which is the “language” used to create an EA.
Each EA you create will follow a similar pattern of:
- Header
- Special function initialize
- Special function start
- Special function de-initialize
- Control
The header is the lead within any EA. This is where you will place the indicators and parameters within which your EA will be working. Through the header, you can also implement any money management rules and dictate global variables such as stops.
Anything that follows builds upon this foundation. On top of this, you’ll need to add the special function initialize, special function start, special function de-initialize, and control.
The latter two functions are fairly self-explanatory, addressing your exit from a trade. However, the special function initialize and special function start are a different story. Through this part of the coding process, you can retrieve the value of your chosen indicators, address trading logic specified within the header, and address current orders and signals. The special function part of the code is what obtains the indicator value before using it to cycle through the other active processes.
Purchasing an EA from the MetaQuotes App Store
Creating an EA from scratch isn’t for everyone; it can be a complex and lengthy process. For those who don’t have the wherewithal to create one, you can opt to buy something that is premade. Now, it must be said that an EA that’s been crafted by someone else will lack the level of customization that a “homebrew” EA will have, but it will also be easily accessible.
The MetaQuotes app store, which is currently rife with EA options and variants, allows MT users and developers to offer up EAs directly to other MT users. Through this level of choice, you can modify the search criteria and find EAs that suit your short-term and long-term trading needs.
Installing an EA is straightforward and involves a few simple steps. This guide will walk you through the process for both MT4 and MT5.
How to Install an EA on MT4 and MT5
Step 1: Transferring Files
- Open your MT4/MT5 desktop application.
- Click on "File" at the top left corner.
- Select "Open Data Folder."
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For MT4 users, navigate to the "MQL4" folder and then open to the "Experts" folder.
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For MT5 users, navigate to the "MQL5" folder, then open the "Experts" folder, and lastly open the "Advisors" folder
- Copy and paste the original EA files into the folder.
- Restart your MT4/MT5 desktop application.
Step 2: Installing the EA
- Go to the "Navigator" tab on the left side.
- Click on the "Plus" icon next to "Expert Advisors."
MT4 MT5 - The EA you copied into the folder will be visible there. If not, right-click on "Expert Advisors" and select "Refresh."
MT4 MT5 - To use the EA, drag it onto the charts.
Step 3: Adjusting the Settings
- To customize the EA, adjust its settings by double-clicking on it. A pop-up box will appear, allowing you to tweak the EA as desired.
MT4 MT5 - Click "OK" when finished.
Conclusion
Every trader is always looking for an additional “leg up,” and for those who have a preference for automated trading, EAs may represent just that. Although EAs carry a large number of advantages—and they can certainly help boost your trading efforts—they are not for everyone. We must remind you that using an EA blindly is ill advised, so test it out through a demo platform first as a means to get a true understanding of it before committing any actual capital.