Forex Advisors (robots) : Basics of Application
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Thread: Forex Advisors (robots) : Basics of Application

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    Super Moderator Gulfstream's Avatar
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    Forex Advisors (robots) : Basics of Application

    Almost all beginners start their way to forex from the search and installation of advisers. Each practicing trader has his own set of trading assistants. And finally, many experienced traders embody their strategies in the code over the years, so programs that don’t know tiredness, emotions and doubts could earn for their owners and users means to bread and butter (and for someone to a bungalow in the Seychelles).

    Here I will try to tell you who is an adviser, what kinds of them are there , how correctly to find and install an adviser to the terminal, how to test it and how to select input parameters. The topic will be focused primarily on newcomers to the forex market, but I think that experienced traders will also be able to find a number of interesting points for themselves.


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    Last edited by Gulfstream; 06-10-2019 at 09:58 AM.

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    Super Moderator Gulfstream's Avatar
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    So, what is an adviser?

    An Expert Advisor or Expert Advisor (from Expert Adviser) is an MQL program for MetaTrader4 / 5 terminals that has access to trading functions. This means that the adviser can open, change, close or delete orders and positions. This is the main difference between advisers and indicators that do not have such access. And this is the main reason why I do not recommend to install advisors on accounts with a real deposit, if you do not know the principles of its activities, settings, and how it interacts with other advisors and orders opened manually.


    Advisors are different ...
    Everyone who has thought about automated trading at least once has come across a huge selection of various advisors that can be found on any website or forum on near-Forex topics. It is very difficult to understand all this variety, but we will try. Firstly, I will tell you what types of advisers exist:

    Types of advisors:
    1. Advisors for automated trading. The most common type of advisers. Provide a full range of functions for opening, maintaining and closing orders. Human intervention in their work is not provided or minimized.
    In the overwhelming majority they work only with their own orders, they do not interfere in the work of other advisers and a person.
    2. Advisors for semi-automated trading. This includes various systems for maintaining open orders (advanced trailing stop, transferring orders to breakeven), as well as systems where part of orders is opened manually (for example, the first grid order). They work with manual orders, they can interfere with the work of other advisers.
    3. Advisors for manual trading. Most often, there are various advanced trading panels and
    calculators that make it easier for a trader to open market and pending orders, calculate volumes, stop levels, and risk and money management.

    Pros: Regular profit, prolonged drawdowns on the balance are absent.
    Cons: a rather short series of unsuccessful transactions (5-8) leads to a loss of deposit.

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    Super Moderator Gulfstream's Avatar
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    Types of automated advisors:


    1. Advisors with lot increase in the loss. Each time a loss is made, the adviser increases the volume by a certain ratio until the profit exceeds the amount of previous losses or until the loss exceeds the specified limit (in most cases this limit is the entire account balance). Due to some similarity with the martingale algorithm from the game theory, advisors of this type are called “martinas”, “monkeys”.
    A typical chart of the profitability of an adviser with an increase in lot (lot) after a loss. Each profitable trade draws a new top on the chart:
    Pros: Regular profit, prolonged drawdowns on the balance are absent.
    Cons: a rather short series of unsuccessful transactions (5-8) leads to a loss of deposit.

    2. Advisors with averaging (mesh). This type of advisors has no limit in the form of Stop Loss order. Instead, when the price moves against the open position, the adviser places new orders in the same direction and with the same volume as the initial one.
    The yield chart of a typical averager. Practically ideal straight line (or a parabola in case of an increase in the lot is proportional to the size of the deposit).

    Pros: stable profit, a large number of transactions (suitable for rebate services), almost constantly in the market.
    Cons: Regularly “goes” into a large drawdown by means of equity, a drawdown that is orders of magnitude greater than profit. Sooner or later, reset the deposit.

    3.
    Trend Advisors (Indicator). They use trend indicators like Moving Average, Bollinger Bands and other methods of determining trends and reversals. As it is already clear from the name, they work well in a trending market, during a lull - flat (flat) they receive significant losses.
    A typical chart of an advisor that does not use averaging and increasing the lot:

    Pros: Do not overstate the risks, low drawdowns, set foot, designed for long-term work with large deposits.
    Cons: A small profit, dependence on the current type of markets. A small number of transactions.

    4. Flat advisors. The opposite to the trend. Work within the formed boundaries of the flat. Often, such advisors operate in a low volatile market during the Pacific and Asian sessions. On trend movements, they switch off or “merge”.
    Pros: They can give a good profit at the time when other types of advisers remain out of the market.
    Cons: Since trading goes on a narrow range, they use an inflated risk. With a sharp exit from the flat, they receive significant losses, often requiring manual control.

    5. Hedging (Hegging EA). Advisors of this type open multidirectional orders for correlated currency pairs at times when the difference between them reaches a certain value.
    Pros: Risks are hedged, stable profit.
    Cons: Low profitability, a long time is in a drawdown.

    6. Scalping EA. Advisors of this type open a lot of deals with goals of several points. They have a very large percentage of successful transactions, but the average losing trade is several times higher than the average profitable one. It is very sensitive to broker trading conditions - they work best on ECN accounts with minimal spreads and execution time.
    Typical scalper job:

    Pros: Suitable for rebate (rebates) services, high yield.
    Cons: They require a VPS server, do not work with all brokers, are difficult to configure. Difficult to find in the public domain.

    7. News. Advisors place orders during high volatility, which occurs when important news is released. Just like the previous type of advisors, it is very sensitive to the speed of execution and broker spread expansion.
    Pros: Significant gains during strong movements. Easy to create and configure.
    Cons: High requirements to the quality of order execution by a broker during increased volatility, installation on a VPS server is desirable. It requires manual time to trade, otherwise there will be losses during small false movements. Because of this, they are closer to semi-automatic systems.

    8. Arbitrage (Arbitrage EA). The principle of operation of these advisors is based on the imperfection of market maker / broker algorithms, when real cross-rates of currencies change more slowly than synthetic ones (calculated mathematically from direct rates to the dollar). They contain elements of high-frequency trading, as a result of which they are most critical to the speed of execution.
    Pros: They give almost guaranteed and stable profits in ideal conditions.
    Cons: Due to the unattainability of ideal conditions often cause losses instead of profit. Also banned by most brokers.

    Such a classification is rather arbitrary, since advisors often combine several types. For example, many well-known advisers Ilan and Avtoprofit are a combination of the first two types, that is, averaging with a simultaneous increase in the lot. Many indicator advisors include separate algorithms for the flat and for the trending market.

    So, having understood a little what kind of advisers are and why they are needed, you can start searching, installing and testing.

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    Where to find an adviser?

    The easiest way is to download an advisor from the official MetaTrader market. This can be done in two ways:
    - launch the terminal and open the Market / Experts tab.
    - Or go to the official website of the market: _https: //www.mql5.com/market

    In the market you can find a huge variety of advisors of all types for both MT4 / MT5 platforms.
    Most of the advisers, of course, paid: for that he and the market. There are also free products, some of which are trimmed versions of paid ones, and some of them are fully-featured programs ready for installation and operation.
    In addition to the official market, there are many advisers scattered across various sites and forums on forex topics, and some programmers sell their advisors only on their own sites. The indisputable advantage of such search is that the majority of advisers are available absolutely free of charge and a huge online community of traders leads an open discussion, testing and search for optimal parameters of the work of advisors.


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    How to install the selected adviser in the terminal?

    The installation of the expert advisor consists in copying the expert advisor files and the attached indicators to the terminal data directory. How to find it? We start the terminal, click File -> Open Data Folder. Open the MQL4 (MQL5) folder.

    Expert advisor files are copied to the Experts folder (with the extension mq4 / ex4 or mq5 / ex5). In the Indicators folder - the indicator files are copied. If there are files with the extension .dll - libraries - copy them to the Libraries folder. Files .set - presets - copy to the Presets folder.

    After all the manipulations, we restart the terminal. If everything is done correctly, the adviser will appear in the “Advisors” submenu of the terminal navigator:
    Installing free advisors from the market is even easier - we find the advisor in the list, click the download button. Immediately after this, the adviser will appear in the list of advisers in the Market subsection.

    For all paid advisors from the market, before purchasing, you can download a demo version that works only in the strategy tester mode (Download demo button). After extensive testing, you can proceed directly to buying or renting an advisor.


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    Testing on historical data.

    Well, we smoothly came to the most important aspect of working with advisors - testing on historical data. I strongly advise do not skip this stage if you don’t want to become disillusioned with advisors once and for all, losing a couple of deposits due to carelessness and haste. Of course, testing does not give any guarantee that the results obtained by the advisor on history will be repeated in the future. Rather, on the contrary, the results of real trading always differ from the results of testing, even at the same period. But testing over a long period will give an understanding of how an adviser behaves in the long run, how it transfers moments of extreme volatility (like those that occurred during brexit), protracted trends and flat. According to the results of testing, you can determine its type (using the classification above), as well as see its strengths and weaknesses.

    Next, I will briefly tell you about the strategy tester of the terminals Metatrader 5 and Metatrader 4 and, using a small example, I will show the importance of preliminary testing.

    For example in the market is chosen Metatrader 5 adviser. We read the description: it does not use high-risk algorithms to increase the lot, it is easy to set up, it is already optimized for the EURUSD pair, while it shows very good profitability - almost 500% per annum with a drawdown of less than 35%.

    Great, that`s what you need! The hand has already moved to the buy button, but the price of a thousand dollars has somewhat cooled the heat. I download the demo, I run it in the tester:
    The period is the same as that of the author, the default parameters (according to the application are already optimized for EURUSD, m5), the lot is recommended 0.01 for a $ 1000 deposit. Run the test and:

    Something went wrong ... Stopout in a month after the start of the test. Or rather, 02/03/2016, on a day candle with a size of 220 points. Well, about the absence of risk-based algorithms, the author clearly got excited ... At the same time, from the news on that day, only the forecast for ADP nonpharm and business activity indices. News of similar importance come every other day, you don’t turn off the owl for each of them ... Well, we’ll find out the real depth of the drawdown: we’ll increase the balance without changing the lot size:

    The problem area was covered with a drawdown of $ 2651 in equity (49%). Total: if we are guided by a maximum drawdown of no more than 30% (so that there is a certain reserve for a deeper drawdown), then our deposit should be at least 10,000 with a lot of 0.01. In this case, the yield would be $ 3582 per year, or 35.8% per annum. Everything is nowhere near as beautiful as promised in advertising, but still not so bad. Test with the same parameters, for example, 2014:

    Oops ... And again stopout. And here it is more interesting: even increasing the deposit to 100,000 did not lead to anything - the adviser goes into an endless drawdown against a powerful trend:

    Well, on this, it seems, you can finish. The verdict is an aggressive averager, the absence of subsidence control algorithms and a common stop. On a flat, you can earn something, but at the same time it requires an oversized deposit to withstand large drawdowns. On a pronounced recoilless trend has no chance.

    So, having spent half an hour testing the adviser (of which most of the time I prepared pictures for the article), you can save a lot of money and, most importantly, time without spending them in vain on unworthy things.

    P.S. I didn’t intend to do any advertising or anti-advertising, therefore I ask you to consider all coincidences with real events as an accident.


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  7. #7
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    I did not try to trade with robots before because i'm afraid to use them and so i depend on manual trading, but many traders around the world trade with robots and can be able to make good money with them because they know how to work with them successfully and so they can be able to make consistent profits with them and save their money.

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