Tag Archives: Disadvantages

Forex Trading Articles

Expert Advisor – The Advantages And Disadvantages You’ll Must Know

Many traders still wonder what would be their most adapted trading system after having learned most of the Forex basics. Many traders will start looking to automate their trading system. Not everybody can sit down 24 hours a day in front of their computers, that is why they consider delegating the work to an Expert Advisor. This however does not mean that you should just follow the software blindly, you should have your own system to use alongside the expert advisor. There are pros and cons in using Forex Expert Advisor but the latter is somewhat overshadowed by the former.

Advantages of using an Expert Advisor

In order to benefit from a Forex Expert advisor, you need to set the right configuration. Once done, you will have the freedom and all the free time you need because it will start trading for you without any intervention.

Any human emotions (like greed and fear) are instantly eliminated by the robot. Because it has no emotions, an Expert Advisor will trade exactly as per instructed.

The Expert Advisor has parameters that can be configured and fine tuned as per your needs and preferences.

Speed is one of the most important options for an Expert Advisor.

A professional Expert Advisor will take care of all the in-depth analysis which makes it easier for beginners to manage their Forex portfolio.

Many Expert Advisor sellers have a customer support for their clients in addition to a money back guarantee and proofs of trading results.

.The software comes with a plan and carries it out consistently.

There are expert advisors that can manage monitoring quite a number of currencies simultaneously and this gives you more opportunities compared to manual trading.

Many tasks can be automated with Expert Advisors, which make it easier for any trader to follow and trade the markets.

Forex Expert Advisors have some inconveniences

Pre-made Expert Advisors are usually optimized for a single currency pair. But, you can easily create a specific optimization for each pair

Any manual intervention during trading might lead to the software malfunctioning.

There is still a need to look at the wider picture because the software has no non-programmable data and thus the trader must keep an eye on important Forex data as political and economic news might largely affect the market.

Most expert advisors will not work on high volatility days.

Things to look for in a Forex Expert Advisor

.Ensure that the EA’s creator has contact information for inquiries. All the information required to understand how and why the robot is taking that trade should be on the website.

All EAs should be adjustable so as to fit the current market conditions. The creators upgrade their products every now and then, and they should offer you a lifetime of free updates.

Conclusion:

Every trader needs an Expert Advisor, you can use it help you in your trading research if you don’t want it to trade for you.

Forex Trading Articles

Forex Trading – the Big Disadvantages of Forex Trading

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I constantly read articles about the advantages of forex trading but these are actually disadvantages for most traders and that’s why 95% of traders lose all their equity quickly and here we will look at the two specific reasons, most forex traders lose…

1. Leverage

Today, you can leverage your investment with an online forex broker by 200, or even 400 to 1 and this creates tremendous profit potential – but it’s a fact that most traders actually over leverage and lose.

With leverage you need to be very accurate with the execution of your trading signals and very careful with your stop loss protection. When trading on leverage if you are not careful, a quick equity spike will wipe your position.

In stock trading you can buy and hold and you only risk what you have paid for the stock and so long as it comes back you make a profit and you can wait.

In forex trading its different – you have losses that are open ended and they pile up quickly. You can’t just sit back – you need to take action.

As most traders lack discipline, they very often hope a position turns around and don’t have a get out point. A small loss soon ends up being a big loss and their equity is gone. Most traders hate admitting their wrong – they want the big profit potential leverage gives them but don’t think about the downside.

2. Volatility

Forex prices are volatile and make big moves everyday – combine this with leverage and you have a powerful tool for profits which of course can also cause losses.

Most traders have no idea about how volatility affects their trading and how to deal with it. Most forex traders have never heard of, let alone understand “standard deviation of price” yet it’s an essential part of any traders forex education.

You have to know what is normal volatility and what isn’t, to have any hope of succeeding with your forex trading strategy.

Most traders make the error of placing stops to close to their entry point and they get taken out by normal volatility and this is because they are normally over leveraged.

Most traders try so hard to avoid risk they actually create it for themselves.

The way to make money in forex trading is:

Use low leverage and stops outside of normal volatility – NOT high leverage and stops within normal volatility.

In forex trading seeing the longer term trends on a forex chart is easy – making money from them is anything but. The correct execution of trading signals, in line with the odds and placing of sensible stops is what separates the winners who pile up big profits from the rest.

Forex trading is high risk / high reward – the bigger the risk the bigger the reward – period. You need to be aware that you need to manage risk and build your own set of rules within your forex trading system to combat it.

REMEMBER

The advantages of currency trading can be disadvantages as we have seen and you need to think lower leverage wider stops rather than higher leverage closer stops. Most traders do the latter and get wiped out quickly don’t make the same mistake.