Over the past couple of weeks, I’ve been going over how manual and discretionary traders can use expert advisors as tools to make their trading easier, faster, more accurate and potentially more profitable.
I want traders to understand that expert advisors (or robots, or EA’s), are not just for automated trading using someone else’s trading strategy (or one you have programmed yourselves). You can also use EA’s before placing the trade, to place the trade and after the trade is placed.
Why Place Trades Using An Expert Advisor?
I use Metatrader4, so I want to go over a little trading scenario that used to happen to me all the time. I tend to be a level headed person before the trade and look for the best setups. Stress only kicks in once the live trade enters the market.
You see, in my opinion, placing a discretionary trade in Metatrader4 is uncomfortable. It is clunky. And for me, it is too easy to make a mistake. The truth is, I’m not very good at numbers and dealing with numbers makes me nervous. (I know, kind of weird coming from a Forex trader, right?)
Here is what I mean…
Some people are very comfortable talking about the market in numbers. They say things like, “When the EURUSD reaches the 1.3085 level, I’m looking to sell”. And in their minds they can visualize this level. I have trouble with this and need to see the level on the charts… like drawing a horizontal line at that level, for example. I cannot be the only one with a brain that works like this.
When I have to place a trade, say a pending order, in Metatrader4… having to deal with numbers makes me nervous.
- I need to figure out the number to place the pending order.
- I need to figure out the number to place my stop loss. This means adding or subtracting, and knowing how to do this on different currency pairs.
- I need to figure out the number to place my take profit. Again, more adding and subtracting.
- I need to figure out the lot size based on my money management strategy.
- I need to figure out the risk to reward ratio to see if I want to take the trade or let it pass.
Like I said before, this might not be a problem for some of you. But for me, all this calculating and plugging into MT4 is very stressful… and compounded by the fact I’m trying to get into the market while it moves. There is just too much room for error and I end up having to re-check my calculations and inputs over and over again.
I fixed this problem by using an expert advisor that helps me place trades in MT4. I can program certain parameters, place trades by moving lines on the chart (very visual), and automate things like calculating the proper lot size to use. (As a matter for fact, there is an advanced money management formula hard coded). Basically, when I want to get into the markets, all I do is use the expert advisor to set up the trade visually and hit a button.
Reasons Why I Use An Expert Advisor To Place a Discretionary Trade
There are two main reasons I place my manual trades using an expert advisor…
Less Stressful: As I stated above, dealing with all those numbers and inputting them into Metatrader4 drives me crazy. When all I want to do is get into the markets as fast as possible, I’m stressing about numbers, math and putting the numbers in properly.
More Accurate: Automating the process with an EA has the added benefit of being more accurate. I’m less likely to make a mistake in my calculations or entry of the numbers into MT4. I can accept losing trades… but not when they happen because I made a stupid mistake placing the trade.
In short, manual trading is hard enough… so any time you can reduce stress and eliminate errors, you should take it.
Why You Should Build Your Own EA To Place Trades
Once you’ve been trading for a while and finally define yourself as a trader, your job becomes repetitive. You have a set of rules, and you follow them over and again. The steps you take to place the trade are UNIQUE to you. Therefore, it is a good idea to use a trading tool (in this case an EA to place the trades), that is designed specifically for the way you trade.
Let me give you an example…
I had an EA developed to help me manage the trade after they were placed. (This is something I’m going to talk about in the next post). I gave this Trade Management EA away to other traders. Inevitably, they would get back to me and ask for something to be changed or added.
They wanted the EA to do exactly what they wanted… and what I gave them was not exact enough. Basically, they did not want to change the way they like to trade to fit the tool… then wanted the tool to be changed to fit how they trade. Well, since I am not a programmer, I could not make all the changes these traders needed.
So, I know first hand how important it is to have the tool (the EA you use to place the trade), be EXACTLY built to the needs of the individual trader. I hope this sparks some ideas about how to use EA’s when placing the trade.
On Tuesday, I want to go over my favorite topic concerning manual traders using expert advisors. It has to do with using an EA for trade management after the trade is placed and automating your exit strategy.
Have any ideas for placing discretionary trades with an expert advisor popped into your head? Share your ideas in the comment section below.