Helps Maintain Discipline
It’s often said that trading is simple but not easy. The reason for this is that the way that our brains are wired is in direct conflict to achieving optimal results in the market. Most times, those choices that feel the most comfortable in the market, are the very ones that tend to get us in trouble. And conversely, those choices that feel gut wrenching, are the very ones that tend to provide for the best, most profitable trading opportunities.
Maintaining disciple is particularly difficult for discretionary traders who are at the constant whim of their emotions as they engage with market forces. Those traders, on the other hand, that have taken the time and effort to create a rule-based trading methodology which can be converted into a Metatrader 4 expert advisor system, can preserve more discipline around their trading.
This inherent advantage comes from putting your full faith in the trading system, which will follow your programmed commands, without fail or second thought. This type of robotic interaction is the epitome of disciplined execution in the market. This is an area where computerized expert advisor trading systems shine.
Faster Order Execution
Regardless of whether you consider yourself a scalper, a day trader, swing trader, or position trader, it is of utmost importance to ensure that you are reacting quickly to trade setups and executing your trades in the most efficient manner possible. This becomes increasingly important as your trading timeframe decreases. For example, a loss in profit potential of a few pips can make a drastic difference on a trade for a scalper compared to a long-term position trader.
Reduced Time Commitment
There are only so many hours in a day that a discretionary trader can commit to the market. Typically they will devote a certain allotment of time that both fits their work and life schedule. This can limit the number of opportunities available to discretionary traders. Keep in mind that the Forex market is a 24 hour market, and opportunities can arise at any hour of the day.
Deploying a Forex expert advisor can maximize efficiency and reduce the time needed to monitor the markets. Once the development time for creating an expert advisor has been completed, the ongoing monitoring of your rule-based trading system can be quite minimal. This reduced time commitment coupled with the ability to take advantage of round-the-clock trade opportunities can add to the appeal of utilizing an EA based trading approach.
Promotes Work Life Balance
There needs to be a balance between the time you spend on market activities and other work and family related commitments. When this balance exists, it will allow you to trade in a clear focused manner, while taking care of other responsibilities in your life.
A profitable expert advisor can help you to trade the markets while holding down a full-time job. This can also be accomplished if you are discretionary trader, however, it becomes much more difficult if you are more focused on short-term trading time frames. Generally speaking, for discretionary traders, the shorter your trading timeframe, the longer you will need to stay glued to your computer screen during the trading session.
Whether we realize it or not, emotions can play a large part in our decision process in the financial markets. We like to think that when we are trading the markets, that we have complete control over our senses, and that we will act in a manner that is consistent with preservation and growth of our capital. However, we know from research that this is simply not the case in most instances.
The effects of fear and greed in the market can be enormous and weigh heavily on our decision process. So we need to do whatever we can so as to try to tame those negative emotions. And one of the ways that this can be accomplished is by deploying an expert advisor trading system in the market. EA’s perform their function in the market without any emotional barriers.
They are simply programmed to follow and execute a predefined set of rules, and that’s exactly what they do. As such, a major advantage in utilizing expert advisors is that they will help prevent us from falling into the trap of relying too much on our feelings rather than just focusing on the trade situation in an unbiased manner.
Makes Backtesting Easier
Every trader should become familiar with the overall metrics of their trading strategy. This includes various performance metrics such as win percentage, average win to average loss, maximum drawdown, number of consecutive wins, number of consecutive losses, trade expectancy, profit factor and more. Only when you have a good sense for these important metrics will you be able to consistently stick to the trading strategy.
One of the best ways to arrive at these metrics is by performing a backtest. Backtesting can be quite cumbersome for traders that trade manually. However, for the system trader, backtesting can often be a breeze. Metatrader has a robust back testing engine that can perform a back test of your trade strategy relatively quickly. You are only limited to the amount of historical data that you have available for running the back test. Additionally, once the back test has been performed, you can run various optimization tests as well in an effort to enhance the performance of the expert advisor.