Choosing a Metatrader Expert Advisor
Things To Consider When Choosing The Best MetaTrader Trading Robot
Metatrader Expert Advisor, which is also a Trading Bot, is an automatic program that is built to trade on your behalf automatically. Having a Metatrader Expert Advisor or EA is definitely a smart way to trade online; especially when you deal with several platforms.
However, not all EA the same. You need to find an EA that suits your risk level and trading strategy. Therefore, to choose the right EA you need to ask yourself a few questions. These questions will explore the tangible and intangible factors of choosing the best EA.
What Are Tangible factors?
The first thing that we look at is the tangible or quantifiable factors. These factors are the one that we could see, read, and then decided on. For instance, if you a want to buy new Plasma TV, the quantitative factor is looking at the percentage of users buying the same TV from the same brand in comparison to another brand. Alternatively, you choose to buy some product on bulk but with a discount. The variable shows that buying more is cheaper in consideration of buying it individually. However, another variable that affect this decision is whether you need to buy it in bulk or not. There is no point in buying in bulks if you are not using it.All through this report, we will draw attention to the quantifiable factors that should influence your decision in choosing the right EA. The measures and data that we are going to explore will focus on some of the crucial variables. These must be put under consideration if you want to have the best EA.
Quantifiable Factor Number 1 : Reading Trading Statistic
It is very vital to maintain one trading risk to manageable level. This is one of the important things when choosing a trading robot. One way to look at this is by going through their quantitative stats. If you are beginner, learning how to read this statistic is necessary. Read some books on trading statistic and the usual jargons so you will not be confused.However, if you have been trading for a while, you should learn how to discern those data to judge the best functioning EA. In the following reports, we will show various examples, together with the statistical data that will feature how traders like you can choose an Expert Advisor. Understand that it is imperative that you make the right decision. This is something that will determine whether you will make profit or loss on trading. Moreover, that margin of loss, if not maintained properly, can be something you cannot afford. Thus resulting in financial difficulties that makes many traders loses their fortune in a single trade.
Quantifiable Factor Number 2 : Measuring Your Profitability.
The reason you trade online is to make profit. Nobody comes to the market and hope to lose money. However, when you have MT4 EA, you need to know a few things. At the end of the trading day, you should expect to have positive returns and not otherwise.
First, look at historical data. Bear in mind that although historical data is not a sign of future performance, it is still ridiculous to choose an EA with a losing record. You would want an EA that could gives you profit instead of losses.
Nevertheless, many Expert Advisor trading robot shows good performance. In this case, you need to compare these EA and choose the best one by measuring quantifiable data. One of the best methods in doing comparison is by looking at each EA profitability factor.
This simple but vital mathematical equation shows whether you can anticipate a positive or negative return on your capital. It also considers another vital risk factor, which we will explore in the following articles.
The profitability factor is the ratio of how much you can profit for each dollar traded over how much you could lose on the same market. The mathematical equation is calculated as follows:
(profit - commission)/(max drawdown + commission)
EA that show a value less than 1 signify an EA with a bad historical data; whereby the returns is much less than the losses and risk. In other words, this EA showed that it has a low possibility to provide you with a profitable trading. Try not to choose any EA with a profitability factor of less than one. Refer below statistics for 3 mock EAs:
Expert Advisor: 1 2 3
Initial Deposit 5000 4500 6500
Total Gain 3200 2200 4335
Total Loss 2,400 1259 3,890
Commissions 75 125 65
Max Drawdown 350 585 500
Profit Factor 1.706 1.149 0.673
As you can see, EA 3 has a profitability factor (PF) below 1. Even with the limited data, it is already possible to eliminate EA 3. You can also choose to reject EA 2 as it possibly does not meet your minimum requirement of return. Although the PF is higher than 1, the max drawdown data is unconvincing. Max drawdown is an important factor in discerning risk. So let us look more into this particular item and at the same, to understand why it is a critical statistic.
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Posted by Borys F at 1/28/2012 10:40 PM 
Categories: expert advisor
Tags: expert advisor trading bot mt4 ea best ea
Categories: expert advisor
Tags: expert advisor trading bot mt4 ea best ea
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