Algo trading via EAs in MetaTrader 4 is perhaps the most popular way to automate trading in forex and CFD markets. That makes sense because MT4 is one of the more prominent platforms and because it has a massive base of community-made EAs on top of an already solid pre-made set.
However, getting into automated trading can be scary. It seems overly technical at first, and many traders are afraid of their algorithm losing control and somehow spending all their money. Sure, that kind of thing can happen if you dive into algo trading recklessly. But if you do it right, it’s almost impossible.
This article will cover the basics of what algo trading is, how traders normally use it, and how they can start doing so in MetaTrader 4.
What is algo trading?
Algo, in this case, is short for algorithm or algorithmic. In other words, algo trading is an automated trading routine that follows pre-programmed rules. Different platforms use different names for these algorithms. In MT4 and MT5, for that matter, they go by ‘Expert Advisors’ or EAs.
The rules are different, and they depend on the exact tool the trader is using. Sometimes EAs will react to price action, other times they’ll rely on specific points on technical indicators.
However, they monitor the markets constantly and make decisions based on predetermined factors. This constant monitoring allows traders to easily let their systems run on multiple markets without the need to intensively multitask.
In other words, this means that EAs take any sort of emotion out of the equation. They simply follow their routine, and their success depends on how well the algorithm fits market circumstances.
The three types of expert advisors (EAs)
Traders mostly use Expert Advisors to fully automate their strategies but that’s not all they’re capable of. In fact, they can also be a useful tool for traders who simply want to supplement their trading routine with some raw machine logic. There are three types of EAs in general:
Signal-based EAs:
These don’t do any actual trading on behalf of the trader. Instead, they use 技術指標 and price action patterns to generate trading signals. This may alert traders to opportunities they’d otherwise miss, but allows them to maintain full control of their trading routine.
Semi-automated EAs:
As their name implies, these EAs have some degree of automation but don’t go through the entire trading process. For instance, they may open trades but not close them or allow the trader to set their own TP/SL levels. This allows the trader to intervene and keep a large degree of control while taking some pressure off their trading.
Fully-automated expert advisors (EAs):
The most common type and the one most traders consider the default. They fully automate trading and do so without any need for human intervention. However, they won’t simply eat away at trader funds if they go haywire. They can be shut down at any time, giving the trader full control back.
What do expert advisors (EAs) do?
Some traders are still wary of letting a program run their trading because they think EAs only open and close trades. However, that’s not true; they have many other functions such as:
- Developing exit strategies
- Modifying said strategies based on market conditions
- Estimating and controlling risk
- Limiting the number of trades per day
- Limiting exposure by measuring drawdowns
- Adjusting their routine according to volatility
Because of all this, EAs are much safer than they may seem from the outside, provided they are set up well. Of course, it’s still preferable to monitor them constantly, but a trader is unlikely to go to sleep and find that EAs have spent all their money by the next day.
Clearing up misconceptions
Before digging into the practical part of using EAs in MT4, let’s clear up some more misconceptions regarding algo trading. It’s important that new algo traders go in completely prepared and aware to avoid setting the wrong expectations.
First, many believe EAs offer guaranteed profits, or are some sort of a get-rich-quick scheme. This is, of course, untrue. There isn’t an EA with a 100% success rate, and traders need to know when and how to apply them correctly.
Along a similar line, many believe that EAs eliminate the need for trading knowledge since they are automatic. Again, this is false. EA users need to have a solid understanding of trading to monitor their performance and look out for anomalies. Additionally, without understanding trading, the chances that they’ll be able to use the right EA at the right time are minimal.
The last misconception here is that one EA is enough. As noted already, there’s no way a single algorithm will do well in different market conditions. A skilled trader will need to recognise what’s happening in their chart and apply the right tool.
How to get EAs for MetaTrader 4?
EAs are programmed in MQL 4, so traders can technically make their own. However, this is unrealistic for most. Instead, traders generally get them either from the platform itself or external sources.
Under the Market tab in the Terminal window in MT4, traders can find thousands of free and paid EAs. Ratings and reviews are available here, giving some indication of quality. There also may be demos for paid options.
Traders can simply download or purchase the EA from here, and it will automatically be installed. All that’s left is to apply it to the chart of an asset the trader wishes to trade.
There are also many trading communities, like MQL5.com or Forex Factory that offer free and paid EAs. Some more specialised communities, like education or strategy providers or consultants, may also offer EAs.
How to install EAs from outside MT4
When downloaded, the file should either be in an ex4, mq4, or zip format. If it’s zipped, traders will need to extract it (at which point, they should either get an ex4 or mq4 file). Traders will then need to open their platform click File then press Open Data folder in the drop-down menu.
This will open a folder with other folders, and traders should then navigate to MQL4, and then Experts. Finally, they will need to copy the file they originally downloaded into this folder. Pinning the Experts folder to your taskbar or making a shortcut may be a good idea if you’re testing out many new EAs, as then, you’d only need to download the file and paste it there, making the whole process much easier.
Finally, a trader will need to restart MT4 for it to recognise the EA they added. To see a list of all installed EAs, they can go to the navigator on the top bar or open it via the ctrl + N shortcut.
The final steps
To make EAs able to automate trading, traders will need to enable AutoTrading in the top bar of MT4. Then, to use an EA, a trader will need to drag it from their navigator to a chart they have open. This will open a dialogue box, and traders can press OK to start the EA.
For some paid EAs, traders will need to paste a license key and to do so, they’ll need to navigate to the inputs tab and paste their key in the correct field to enable the program.
In the upper right-hand corner of the chart, traders will see the name of the EA and a smiley face if it’s active. To deactivate it, simply right-click the chart, go to Expert Advisors, and press Remove.
That covers the basics of using EAs in MT4. However, traders are encouraged to keep researching, as algo trading is a very deep and interesting topic.
Backtesting, for instance, is closely tied to EAs and can improve their effectiveness and help traders understand the situations in which they work. Remember, EAs, despite being automatic will scale with trader knowledge, and the best way to improve is to learn more.
免责声明: This material is for general informational and educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked in this communication.
