How to set up a trading robot correctly, How Does Automated Trading Work in Forex?


Step-by-Step Instructions: Installing an EA

Before buying, an Expert Advisor can and should be carefully run in all unfavorable modes in the built-in Strategy Tester to get a complete grasp of the system, seeing that every Expert Advisor offered on MQL5 Market has a demo version available.

Remember: it is not only the amount paid that you risk when buying a trading robot, but also potential losses that may arise as a result of using such trading robot to trade on the real account.

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Let us have a look at it using as an example a free Three Moving Averages Expert Advisor which we are going to download directly in the MetaTrader 5 terminal. It is an implementation of a how to set up a trading robot correctly trading strategy based on three moving averages.

In addition, attention should be given to potentially suspicious factors, such as: profit factor that is too high, huge profit value on historical data, a great number of external parameters in a trading system, intricate rules of money management.

Even though all of the above is a fairly easy task, most newbies, as well as many somewhat experienced traders are either not aware of these nuances or not always attentive enough.

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Let us once again note that any trading robot downloaded from MQL5 Market can be set for testing directly in the Navigator window. Strategy How to set up a trading robot correctly panel with the Expert Advisor you selected will appear automatically once you press "Test" in the context menu.

Everything is at hand to test the downloaded Expert Advisor and we are ready for a detailed review of the evaluation methods pointed out above. This means that the Strategy Tester emulates the ideal environment for all processes: sending trade requests, updating status of open positions and pending orders, getting trade events, getting price history, calculating indicators and many other things.

Everything is aimed at testing and optimizing the trading strategy within minimum time.

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However, seeing that the operation of a trading robot in real environment is far from being ideal and instantaneous, the Strategy Tester has been enhanced with an additional testing mode that simulates a random delay between sending and execution of a trade order.

This testing mode accurately detects: trading operation handling errors, fitting the strategy to certain trading conditions.

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Getting markedly different trade results after running a single test of the Expert Advisor in two modes, standard and random delay, should get you thinking. First, take a look at the Strategy Tester log as numerous trade errors it contains should be a sufficient reason to cross such Expert Advisor off your list.

In our case, no errors of that kind have been detected in the course of stress testing in the random delay mode suggesting that the Expert Advisor has successfully passed the first half of the test.

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Now, let us see if there is any difference between the trade results obtained using single tests run in two modes. Significantly decreased number of trades and profit gained in the random delay mode suggest that the strategy is how to set up a trading robot correctly dependent on the quality of transmission and execution of trade orders and can only earn under certain ideal conditions.

What Is a Forex Robot?

The developer may have done it unintentionally which is very often the case. But such a 'flaw' can turn disastrous to your trading account.

In our example, switching to a different trade order execution mode has not affected the number of trades and transactions.

The test results are just a tiny bit different which can adequately be explained by small price changes present in transactions due to requotes.

Stress testing in the random delay mode has not have a substantial effect on the trade results. Then connect to another broker account and run the test once again.

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Should the results be very much different, it is a good reason to reconsider the need for such trading robot. It appears to be quite reasonable as every instrument behaves in its own way.

Therefore, symbol and time frame are, as a rule, always specified in the description of a trading robot offered on MQL5 Market.

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First, you need to make sure that the Expert Advisor is not going to crash with a critical error or fill the log with trade error messages, being used in inappropriate starting conditions. Second, check that a profitable trading strategy has not become extremely loss-making, due to the above changes in the settings - this can happen where curve fitting had taken place. One of the easiest ways to arrange that kind of test for the Expert Advisor is to optimize it over all symbols selected in Market Watch.

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We run the optimization of the Expert Advisor in that mode on a quite long time frame H1 with "Every tick" generation and get a fairly quick answer to the second question. Results of such optimization show that the strategy has a right to exist, demonstrating statistically sufficient number of trades on each symbol without yielding really bad results.

Mind you, we have tested one strategy on all 13 symbols in Market Watch with the same parameters set by default. We can certainly not expect that every Expert Advisor would work equally well on any symbol and time frame.

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Yet it is worth checking it in the Strategy Tester using this method. It will not only reveal possible code errors but can even give new ideas.

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No obvious code errors have been detected during testing. But what if this is not a consistent pattern and this behavior is due to the testing interval selected from To look into this question, we test the Expert Advisor with the same parameters overtaking We run the test and see the results.

How To Create a MetaTrader 4 Trading Robot

The Expert Advisor is no longer profitable and has immediately become much less wowable. Moreover, losses suffered in significantly exceed profits demonstrated in the Strategy Tester over Conclusion: the Three Moving Averages Expert Advisor requires further development to ensure proper automatic response to changes in the market behavior, or else the right parameters for every interval have to be found make tons of money fast optimization.

Backtesting Over Extended Period of History When giving descriptions, developers of trading robots try to show their products at their best and therefore provide reports and test charts with optimum parameters for a particular interval. Since considerable time has usually passed from the date of publishing the trading robot till the date when you get interested in it, we can run a so-called forward test. Forward testing is testing over a period of history that was not considered when selecting optimum parameters.

The end date is set at So, following the test run over the period from This is however very rare. Forward Testing Forward testing is used to assess stability of the trading system in the changing market behavior.

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Optimization of parameters in the Strategy Tester allows us to get the parameters at which the trading robot is at its best on historical data within a certain interval.