Facts and Myths bout Expert Advisors

Hello,

I am well experienced forex trader, and now my hobby is to search for a stable and profitable automated systems- Expert Advisors. I am here to help everyone, that's why i want to share my knowledge.

Day by day, i hear a lot of horror stories from forex traders, who bought EA's and lost a lot of money..
Mostly they are new comers, so that's why i started thread here 'New Traders', I want that everyone, who even just thinking about to purchase any EA, please, think twice and read my summary about truth of using EA's...


True: There are many EA's that are pure scams.

True: Algorithmic trading by definition, will cease to be an effective strategy once many other people start using it. Further, the algorithm may fail independent of that if the assumptions it is based on change.

True: A lot of people lose a lot of money using cheap, hype marketed, EA's.

False: Everything in the EA world is a scam.

False: No one makes money with an EA. For every loser in a trade there is a gainer, though he may be using a different EA or non at all.

Half Truth: Retail traders can't compete with professionals. True for a lot of reasons, but false in the sense that you shouldn't be trading with a broker that handle professional traders, only other retail traders like yourself.


So all the above being said, here's my advice:

1) If the product looks it's mass marketed, run away.
A lot of EA's vendors also here at myfxbook.com, already banned me from their discussion page... You are asking why? Simple answer, because they are worried, that i will expose their scam...

2) If sounds like an infomercial, run away.

3) If the marketing pitch revolves around how much money OTHER people are making with the EA, run away.


What does that leave:

1) EA's demonstrate a high level of technical understanding AND provide EXPLANATORY evidence describing the what, how, and why of their strategy.

2) EA's that make sense. If you don't understand the strategy of the EA, don't use it.


Last, let me point out that any EA whose strategy in part of whole is based on being 'fast' requires that you get real, professional level hosting for that application. You're not going to be 'fast' running over a broadband connection at your home, no matter how many millions of megabits you think it runs at. Throughput and latency are related but are not the same. Traders need minimal latency, not a million megabits.


Those, that heed this advice are more likely to succeed at the expense of those, that don't heed it.

Thanks for attention!


Best regards,
William

Believe your own EA or public research and live forward testing.

Yes, also good point.

Thank you

Thanks for your thoughts.

There is one Point I want to add: Why do EAs that have success suddenly fail? You say that the Problem is, that too many People start to use it. This might be true for news-spike scalpers like Million Dollar Pips or similar. This Spikes were just arbitraged out by the many People (and maybe trading companies?) that used such an EA.

But look at the Wallstreet EA, that's one that was heavily marketed and most People know. But it is still working. It had a large drawdown in 2014, but I am sure this is because the market has changed in that time. And this is the big big Problem with EAs: the market changes! The same with Forex Growth bot: This was a really good EA until 2013 where it had a 94% DD! And now it seems to work again.

This is the big Problem with EAs: You do good backtests, make a good 2 year Forward test, let it run with a high lot-size and suddenly it goes kaboom! That's why I think it is not possible to make heaps of Money with EAs

Yes.
Very good point- market changes and i have found only a few vendors, who really understand that..
Every EA needs to be update settings time to time.

One of ea's, which i am currently testing, is such problem, when i test it with older settings and older back test history it works great.
When i test old settings and current market situation, it works unstable.. So i assume everyone got my point.

Settings must be updated time to time, because market changes dramatically.

halft truth: some has a good ea with a good marketing skills also.

tankbeta posted:
halft truth: some has a good ea with a good marketing skills also.

But just imagine: If some EA is so great why vendor need to waste his time for marketing, it's not a 5 min question to create eye catching web.?
If EA is so great , he will earn profit from EA trades not just selling copies...
That's the main idea of this point.

yes you are correct! If your the type of person who is selfish and doesnt care of sharing to other people specially your wonderful EA then you dont need marketing or selling.

but i think the logic why people sell some profitable EA is simple.

'if your good at something never do it for free'
-joker

for me its right and acceptable that this EA developers sell there masterpiece specially IF it is really 'profitable' and they want to share it publicly. they deserve to get paid and get more money aside from the trades it makes. right?

Recently a guy on tv said he was earning $2/book sold that he wrote. I though it was waste of time and then he added that he sold 500 000 books.
So the guy got a million just like that...

It's the same with EA... everyone asks why the guy is selling a profitable EA.... simply because it is 100 times more profitable and 1000 times quicker !!!

William82 posted:
Hello,

I am well experienced forex trader, and now my hobby is to search for a stable and profitable automated systems- Expert Advisors. I am here to help everyone, that's why i want to share my knowledge.

Day by day, i hear a lot of horror stories from forex traders, who bought EA's and lost a lot of money..
Mostly they are new comers, so that's why i started thread here 'New Traders', I want that everyone, who even just thinking about to purchase any EA, please, think twice and read my summary about truth of using EA's...


True: There are many EA's that are pure scams.

True: Algorithmic trading by definition, will cease to be an effective strategy once many other people start using it. Further, the algorithm may fail independent of that if the assumptions it is based on change.

True: A lot of people lose a lot of money using cheap, hype marketed, EA's.

False: Everything in the EA world is a scam.

False: No one makes money with an EA. For every loser in a trade there is a gainer, though he may be using a different EA or non at all.

Half Truth: Retail traders can't compete with professionals. True for a lot of reasons, but false in the sense that you shouldn't be trading with a broker that handle professional traders, only other retail traders like yourself.


So all the above being said, here's my advice:

1) If the product looks it's mass marketed, run away.
A lot of EA's vendors also here at myfxbook.com, already banned me from their discussion page... You are asking why? Simple answer, because they are worried, that i will expose their scam...

2) If sounds like an infomercial, run away.

3) If the marketing pitch revolves around how much money OTHER people are making with the EA, run away.


What does that leave:

1) EA's demonstrate a high level of technical understanding AND provide EXPLANATORY evidence describing the what, how, and why of their strategy.

2) EA's that make sense. If you don't understand the strategy of the EA, don't use it.


Last, let me point out that any EA whose strategy in part of whole is based on being 'fast' requires that you get real, professional level hosting for that application. You're not going to be 'fast' running over a broadband connection at your home, no matter how many millions of megabits you think it runs at. Throughput and latency are related but are not the same. Traders need minimal latency, not a million megabits.


Those, that heed this advice are more likely to succeed at the expense of those, that don't heed it.

Thanks for attention!


Best regards,
William

EA is always better than human trading.
Why?
Simply because as trader you have to have trading plan and follow trading rules, right?
EA can do the same without emotions, without sleep and as fast as none person can do

Yes, you are right.
But there are still the same questions, if it really works why to sell EA?
I understand about some spare income, but you can sell EA signals or ask create subscription fee - send signals only for subscribers who pay every month. In that way it will be even more profit for vendor. And less risk that someone will stole EA' strategy or source code..
But mostly they are just selling and run a way, because most of them not working in long term..

William82 posted:
Yes, you are right.
But there are still the same questions, if it really works why to sell EA?
I understand about some spare income, but you can sell EA signals or ask create subscription fee - send signals only for subscribers who pay every month. In that way it will be even more profit for vendor. And less risk that someone will stole EA' strategy or source code..
But mostly they are just selling and run a way, because most of them not working in long term..

Well that's completely different question.
If you have great EA than of course you protect your property and just let people follow your signal.
If you have shitty EA you make mambo jumbo site and sell copies

Most of the time even if you find a good EA, people will usually put the maximum of risk on it based on the back test they have run. Then one day the market will have change and their account will be blown. Typical scenario of all EAs (scam or not).

Then instead of looking for crazy annual profit per year with one EA, on one pair, on one time frame, why not few EAs, each aiming just 5%/year with minimal risk, on each time frame and on each currency pair...

Let's say you have 3 EA/strategies that you want to apply on 6 currency pairs and on 2 different time frame (H1 and D1): 3x6x2=36%/year with 5% DD. (the chance that each EA are at their maximum DD at the same time are very little and even if it happen, it's not a big deal)

togr posted:

William82 posted:
Yes, you are right.
But there are still the same questions, if it really works why to sell EA?
I understand about some spare income, but you can sell EA signals or ask create subscription fee - send signals only for subscribers who pay every month. In that way it will be even more profit for vendor. And less risk that someone will stole EA' strategy or source code..
But mostly they are just selling and run a way, because most of them not working in long term..

Well that's completely different question.
If you have great EA than of course you protect your property and just let people follow your signal.
If you have shitty EA you make mambo jumbo site and sell copies

Totally agree with you!
And such mambo jumbo sites are advertised everywhere. ..

I'm not sure about the whole EA thing... I think i know markets better than a senseless machine. Just my two cents.

so we agree that a consistently profitable ea would be kept while any non working ea would be sold with no support?


My question is, do people actually DEVELOP and USE EA's??? If they were consistently profitable , how would we know they are used?

I have an extensive programming and development background, and I have studied economics for decade, i am brand new to forex trading ( five months paper trading ) , my question is, can it actually work???? seems to good to be true

Yes it works, there is many EA working since more than few years with consistent profit. It's just hard to believe for manual traders which is normal and of course those EAs are not for sale. We are on planet earth not dreamland ;-), why would you sell a profitable EA...

arigoldman posted:
I'm not sure about the whole EA thing... I think i know markets better than a senseless machine. Just my two cents.

You are right. I think if you want to trade trends, you better do it manually. But if you trade retracments in a slow, retracing market, it can be done by an EA.