By Yael Warman

Many analysts have pointed to the proliferation of online trading platforms as a major game changer in the world of forex trading. Whilst this is indeed correct, and one would be foolish to argue otherwise, these platforms have now been around for several years, and the change has already been enjoyed by thousands of traders around the world. In addition, whilst online trading has allowed traders to trade on the move and independently of a broker, the same system of placing trades exists as it always has done.

As such, the biggest change to the trading world has been caused by the advent of automatic trading systems, which allow trading to take place on a trader’s behalf without the need to be present at the time. This form of trading means that automatic trading is the biggest change to this world.

Are you looking to take advantage of this system? Here are 4 factors to consider when choosing such a system.

Factor #1: Independent Testing

Although with many financial products it is recommended to test them yourself, EAs don’t fall into this category. It is essential that you spend time researching the independent websites that will give you a reliable review of a number of EAs on the market, and their vital statistics. This is a product where the test-drive options are limited, so you need to read reviews extensively to assess performance.

Whilst on this subject, note that EAs are not universal, and will not be appropriate for all markets. You will need to alter settings so as to ensure that the EA is best suited for the market in which you wish to utilise the product.

Factor #2: Flexibility

One of the major differences between the various robots is the amount of flexibility which traders are given by the system. Some will allow you to choose from a series of commonly used indicators to build a personal set of rules that apply to your trades, perhaps based on the moving average of a currency pair over the course of a week. Other systems are more complex, and will allow you to program their own strategies into the system, which allows for more flexibility and potentially more rewarding results.

Factor #3: Profitability

Given that you are placing your trust in something else to assist you in making money, the simplest question is whether it will indeed do so. The profit factor, the easiest statistic in this context, is calculated by simply taking the gross profit and subtracting from it the gross loss. Of course, any result less than one will demonstrate a loss making, and stay well clear of that Risk-Reward Ratio

Depending on your risk appetite, the EA which you choose may have a low or high risk-reward. The higher this ratio, the higher the success rate of the EA needs to be to ensure that you continue to be in the black. The level of risk that you’re willing to take is a personal decision and also requires a great deal of thought. Some EAs will be naturally risk averse, whilst others may have a ratio close to 20.

Factor #4: Affordability

EAs are not inexpensive, and you need to decide whether the product is worth the investment. Again, research is crucial, and you need to determine whether there are any hidden costs built into the price.

Bottom Line

There are numerous advantages to using this software, providing that your trading budget allows for the investment. Nonetheless, the decision as to which EA to use is a complex one, and you need to set aside a decent amount of time for the research that is required to make an informed choice. There are many EAs on the market, but don’t assume that once you have acquired one, you can sit back and watch the profits roll in. Continue to keep an eye on your EA, and fine tune the automated settings as you go.

About the Author:

Yael Warman is a creative writer with a strong background in marketing and advertising. Yael has been a writer for over 10 years and has worked for clients in various industries as well as her own companies and is currently the Content Manager at Leverate.