Discover why so many professional traders are building their own Expert Advisors
Welcome to the world of creating automated Forex trading systems using Metatrader Expert Advisors. 2018 has largely been the year of Artificial Intelligence and algorithmic trading.
In fact, Bill Gates mentioned the following on Twitter earlier this year.
So, you might be wondering, what is involved with creating your own Expert Advisors to seamlessly execute your trades into the market 24 hours a day, 5 days a week?
Before we dive into that, it is interesting to note how active the institutional trading desks are in using algorithmic systems to execute their trades into the market.
According to a Greenwich Associates study, the proportion of spot FX traded algorithmically by corporates shot up to 28% in 2016, from only 10% in 2015. Recent reports suggest that figure is now at 30%.
What is a Forex Expert Advisor?
You have no doubt heard the term Expert Advisor brandied around on trading forums around the world. They are becoming more and more popular for several key reasons. Before we get into the benefits of automated trading with your own Metatrader expert advisor, let’s discuss what they are.
An Expert Advisor (EA) is a process in which you code your complete trading system into the computer in order for it to be executed on your behalf.
What can be coded into your trading EAs?
Basically, every component of your trading system can be coded into your Metatrader expert advisor.
This means you will need to identify your:
- Entry criteria
- In profit exit criteria (including trailing stops)
- In loss exit criteria
- Position sizing rules
- Money management rules
- Breakeven rules
Automating your trading
The benefit of creating your own trading robot is so all the order placing can be executed by your computer. You no longer must be there entering in every buy and sell order or adjusting your stop loss as the market moves higher.
Every single aspect of your system can be coded in. And the good part is the EAs operation removes the emotional aspect us humans have when faced with the fear of placing trades.
The MQL4 language is built by the Metaquotes software corp, who build the MT4 and MT5 trading platforms. And it is for this reason the MT4 platform has become one of the most dominant Forex platforms in the market today. You can download Metatrader here.
What programming language is used?
The Metatrader trading platform uses the MQL4 programming language, which is an object-oriented programming language. Many suggest the language used is closest to the C and C++ programming language.
The basics of creating a trading edge in the markets
You can already see the global FX institutions are using the programming tools to automate their trades into the market.
One of the reasons for this is they have a number of Quants who can identify positive expectancy trading ideas and back-test them quickly. You can use the strategy tester within MT4 to test your own systems using historical information too.
Once the back-test results prove there is an edge, it needs to be executed into the market. Now imagine if you had 5-10 of these positive expectancy trading systems. You may be completely overwhelmed when many entry or exit signals trigger at once.
So, they get coded into their respective trading software such as MT4 so they never miss a signal.