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What EA bots are and the pros and cons of running them for your trading…

by , 24 February 2022
What EA bots are and the pros and cons of running them for your trading…
Last week Wednesday, one of our reader's asked about trading bots.

We spoke about the best trading robots in 2022 and how to get started with them. If you missed the article, click here to catch up.

This idea really sparked my attention.

You see, I am a firm believer that trading bots will be the future of trading.

It will be for those who either do not have time to sit in front of a screen all day looking at financial markets.

Or for those who want to run their trading system 24 hours a day, 5 days a week.

If you're looking to adopt an automated system into your trading to run your account, then this article is a good starting point before you begin your robot trading journey.

Basically, I'm going to cover what a trading bot is and the pros and cons of running one in the future.

Let's begin…
What a trading bot is in a nutshell
A trading robot is more formally known as an Expert Advisor or EA Advisor.
Basically, it’s an automated system which monitors the financial market which sets both entry and exit trading price levels and position sizes based on the conditions you give it.
You can set a number of conditions nowadays with trading bots such as placing a trade when…
•    The price touches a certain price level.
•    The market price crosses above or below certain indicators.
•    Two Moving Averages cross up or down
•    The market price breaks below or above a resistance (ceiling) or support (floor level).
•    The level crosses over the chosen parameters of different oscillators (i.e. RSI, Stochastics, MACD, Bollinger Bands etc…)
As always, there are pros and cons for running with a trading bot.
Let’s start with the bad….
Con #1: Risk of errors
If there are any glitches or errors in the trading software, it’s possible for the system to enter your trades with the wrong entry and exit levels. Or later on you may find the robot failed to get out of the market when it hit your take profit or stop loss level.
Con #2: Infant stage
All trading bots I know of are still in their early stages of development.
We haven’t reached the full potential of a highly efficient and effective bot yet.
With companies improving artificial intelligence, machine learning and better technology we should start to get better trading bots in the near future.
Con #3: Internet issues
Some bots only work at their highest level of efficiency when the computer is on as well as when the internet is running smoothly.
If your internet connection fails, the robot will only be able to continue to enter and exit trades once the system is up and running.
TIP: Find an EA that operates during both online and offline times.
I do believe there are merits with running with a trading EA robot though…
Here are a few to take into consideration…
Pro #1: It takes the trade
As a new trader, it can be intimidating to actually take the trading position that lines up according to your strategy.
You feel you don’t want to lose any money, you see other factors that stop you from taking the trade and sometimes you just don’t see the trading setup when it comes.
If you set up the EA correctly, it will execute the trade when all conditions are met without you even needing to be there.
Pro #2: Optimised entries
One of the most difficult tasks as a trader is to enter into a position at a specific time and price.
Most times, we don’t enter at the perfect price because we are not always looking at our screen. Or while we are placing our trading levels, we may miss the boat at the perfect entry price as the market runs without us.
A trading bot, already has the instructions of knowing where to buy, sell and how much to risk.
And so, the bot is more accurate when it comes to optimising trading levels.
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Pro #3: You can do other things
If you have a strong internet connection and a generator which will keep your computer powered up, you’ll be able to leave the EA to execute trades on your behalf while you attend to your other responsibilities and errands.
And if you’re worried about your EA taking the wrong trades or position sizes, you can quickly check on your phone or tablet while you’re away.
Either way, do your research before you adopt a trading bot
I can go on with trading bots pros and cons.
However, if you want to adopt to this style of trading, you’ll need to test them for yourself.
Start off with a small account, do as much research as you can for each EA and then test it out and see if it’ll help you with your trading endeavours.

What EA bots are and the pros and cons of running them for your trading…
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