An expert advisor is a software package that functions as an Automated Forex Trading System. The best forex expert advisors allow traders to perform automated trading without their intervention. However, the traders need to follow some rules for automated trading. This article focuses on some tips that will enable traders to enhance the performance of even the best automated trading system and make more profit.
1. Analyse the Market Condition
One of the major reasons for the failure of EA includes that it does not adapt to the changing market conditions. You can create an EA that functions in all conditions and make it in use when such condition is in play. For instance, operate an EA that is designed for trending markets when the trading is based on market trending.
2. Utilise Non-correlated EA
You should run diversified EAs for more robust trading. Ideally, you should trade in a condition where an EA compensates the performance of another so that you can obtain growing equity. For instance, if you get an EA with short-term workability, you should come with one that functions on daily charts. If you have an algorithmic EA, you can add a discretionary copy-trading strategy to the portfolio.
3. Execute an Exit Plan
Have you an idea of what to do when your trading EA gets caught in an outbreak or your momentum EA gets a victim of a short squeeze? Having a proper exit plan and its execution becomes necessary when such changes in market condition happen. You need to pre-plan what to do in an undesirable situation.
4. Reduce Trade Size During Drawdown
If your EA is experiencing a drawdown, you should cut the size of your trade in order to improve the system. However, before reducing the trade size, you must know your expert advisor’s ability, what you can expect from it and when it starts to go through a losing time. If you find that it has a risk management strategy and will recover quicker than expected, you should rethink before cutting trade size.
5. Allocate Funds Depending on EA Performance
The funding you allocate to an EA will determine whether you reach the trading goals. Having a great system and wrong funding allocation on it is not a good combination for successful trading. A high-performing EA requires a larger amount of funding than that of the lower performing EA.
6. Decrease Your MT4 Workspace
Execution is important, as it makes a profitable trade distinct from a losing trade. You can improve execution by reducing the number of windows open in your MT4 workspace. To be more specific, you should close the market watch window and charts that you are not using, as these are the data-intensive features of the MT4 platform.
7. Trade on A Low Spread Account
High spreads may reduce profits. It also makes your trading tend to have more losing trades. So, you need to trade with low spread account that will facilitate you with an improved performance of EA and reduced costs.
8. Know about Your MAE and MFE
You will obtain a significant edge in enhancing the performance of your system by being well-informed about your Maximum Adverse Excursion (MAE) and Maximum Forward Excursion (MFE). MAE will help you understand how far your trades go into negative territory prior to recovery into profit. On the other hand, MFE will help you understand how far your trades go into profit.
9. Backtest Your Strategy
Trading systems often look great on paper but becomes fail to bring good result once go live. It happens sometimes due to poor design of the system or sometimes because of the poor pricing data. Make sure to trade with the same data on which you have tested the strategy.
10. Use Position Sizing Algorithm
Give your attention to the lucrative area of position sizing, instead of concentrating on improving your entry rules. Market Wizard Van K. Tharp explained in his book ‘The Definitive Guide to Position Sizing’ that it is the most effective way to improve the performance of a system.
You can find system trading less stressful with these techniques. It will also help you manage your system trading well and provide EAs with a substantial edge.