In Forex trade, many Forex traders view EAs as the culmination of countless hours spent meticulously creating an automated version of their trading approach.
Even while it takes a lot of effort and love, the majority of the time the effort results in an EA that falls short of expectations. In the worst situation, it might not work at all, or it might work sporadically.
However, don’t yet discard the good with the bad. By following these suggestions, you could improve the performance of an already successful EA in addition to making your not-so-hot EA a winner.
Let’s begin.
1. Determine the state of the market
EAs’ inability to adjust to shifting Forex trade conditions is the main reason they don’t survive.
It is quite impossible to create an EA that can function in every situation. Building an EA that performs well under certain circumstances and turning it on when those circumstances arise is far simpler.
Is the market trending? Run the EA that was created for markets that are trending. Do things get choppy? Launch your EA for range trading.
Use your judgment to capitalize on the fact that both ranges and trends in the forex markets typically last longer than you might anticipate.
2. Have an exit plan
Do you know what to do when your range trading EA gets caught in a breakout, or your momentum EA is the victim of a short squeeze?
Having an exit plan when the Forex trade conditions change is just as critical as identifying the market conditions in the first place.
And doubling up and hoping for the best is not a good exit plan!
Pre-plan what you will do in an adverse situation. Should you cut your losses completely, or reduce your trade size? Perhaps you could hedge using an option or place a manual trade to offset the risk.
This leads us to the following point.
Run several non-correlated EAs using various time periods, techniques, and currency pairs.
- Do you have a short-term EA in place? Create one now that functions with daily charts.
- Do you have a major-running EA? Consider creating an EA for unusual currency pairs.
- Do you have an algorithmic EA? Why not expand your portfolio to include a discretionary copy-trading strategy?
Your Forex trade may become more stable the more you diversify your EA basket. To have a continually increasing equity curve, you should ideally be in a position where the performance of one EA balances the performance of another.
4. Give Higher-Performing Forex Trade EAs more money and lower-performing EAs less.
“How much?” is maybe the most crucial question a system trader should ask themselves.
Reaching your objectives will depend on how much money you put into a system. No matter how strong the entry and exit criteria are, they won’t help you if you have a wonderful system but provide the wrong amount of cash.
This is a relatively common mistake.
Not all systems must have the same amount of money. More capital can be invested in a higher-quality system, whereas less is offered in a lower-quality system that is worth trading.
This is System Trading’s optional component, which can significantly affect your profits. You must take proactive measures to manage your performance as a systems manager rather than relying solely on your code.
Read FOREX TRADING ROBOTS: A Beginner’s Guide to learn more about Forex Trading Robots
5. When There is a Downturn, Trade Less
Reducing the size of your Forex trades when your EA is going through a decline is the fifth strategy to make your system better.
It’s a recipe for trouble to sit on your hands while your EA is losing. Learn about your EA and what to anticipate from it. If it begins to lose, then reduce your size.
You may occasionally lose out on some gains if your EA heals more quickly than anticipated, but that is only a consequence of having a good risk management strategy.
6. Use a Low Spread Account to Cut Expenses.
Cutting expenses is one of the easiest methods to boost performance. There are two reasons that high spreads are detrimental. One is clear, and the other isn’t.
- They cut into your earnings. Your system bears the cost of each additional fraction of a pip that you pay.
- There are more lost trades for you. You get stopped out more when your spread is wider. It’s as easy as that. Therefore, if a trade is stopped out, you may lose many pips more, even though you may be paying a fraction of a pip more.
For this reason, a commission option with a smaller spread can be more appropriate for EA trading. The spread will be smaller, and you will be stopped out less if the expense is not included.
7. Reduce the Size of your Forex Trade MT4 workspace
In Forex trade, execution is crucial since, in the end, it can determine whether a deal is profitable or not. Milliseconds might have a significant impact on the price you get when it comes to the fastest market moves.
Reducing the number of windows open in your MT4 workspace is a little-known method to improve execution. Close the market watch window and any charts you are not using, in particular, as they are often the platform’s most data-intensive aspects.
The volume of price ticks increases during volatile times in the FX market, increasing the amount of data that MT4 must update. This may cause your terminal’s processing speed to decrease, which will lengthen the time it takes for your EA to send orders to the market. By making the aforementioned adjustments, the platform is simplified and the system’s operation is streamlined.
8. Reduce latency by using a co-located VPS
Imagine eliminating any delay in order execution if your Forex trade EA were operating on the PC directly next to your broker’s.
This is precisely what you get with a co-located virtual private server (VPS). You can access the broker’s data center online, where your EA is installed on a computer.
Compared to running your EA on your machine, this eliminates delays and offers a substantial reliability and redundancy boost.
9. Recognize your MFE and MAE
When it comes to improving the performance of your system, knowing your Maximum Adverse Excursion (MAE) and Maximum Forward Excursion (MFE) provides you a big advantage.
How far your system’s trades usually fall into negative territory before turning a profit is shown by your MAE. This greatly aids in stop-loss placement optimization, which can enhance the trades in your system’s risk/reward ratio.
In a similar vein, the MFE will inform you of the average profit margin before reversing your bets. This enables you to maximize your trading strategy’s profit-taking element.
The good news is that by linking your account to their analysis tools, websites such as www.fxblue.com let you run these studies for free.
10. Use Real-Time Data to Backtest your Forex Trade Plan.
Forex trading strategies that appear promising on paper all too frequently fall short when they go live.
This can occasionally be attributed to subpar system design, but more commonly, it is the result of subpar price data used to backtest the approach.
Be sure to use the same data to test the technique as you will trade it. Naturally, using a demo account to execute your EA causes the same problem.
Conclusion
While creating and optimizing a Forex trade EA can be a complex and often frustrating endeavor, success lies not just in the code but in how you adapt and manage it. By understanding market conditions, implementing solid risk management, diversifying your strategies, and optimizing your execution environment, you give your EA a fighting chance in the real world. Remember, even the best systems need guidance—think like a systems manager, not just a programmer, and you’ll be well on your way to turning a good EA into a consistently profitable one.
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