Maybe you're like me and have spent countless hours & money testing various mt4 expert advisors - only to find that they don't work long term. They all seem to work for a period: weeks or even months - but then the EA becomes very unprofitable.
The main problem with expert advisors is that most of them will work for only certain market conditions and as markets evolve over time (sometimes very quickly) the EA doesn't adapt to be able to remain profitable. The forex trading market is a living breathing organism with a mind of it's own. Yes, trading is based on patterns and trying to predict what will happen next based on the currency's trading behavior - but what do you do when the trade patterns are constantly changing?
The concept is great - plug in a $99 piece of software and allow it to make all of your trades. Then sit back and watch your account grow into a million dollars in the next 12 months.The goal is to generate profits in the forex market without becoming attached to a trading screen all day. However, I believe the old adage "if something seems too good to be true - then it probably is" definitely applies to using MT4 expert advisors.
Some trading systems use a high stop loss of 300 pips and they are able to "show" great gains for awhile. But sooner or later these automated 4x trading methods all experience high losses. Our goal with Forex Success Recipe is to have a higher avg win than our avg loss.
All of our real-time trade alerts are generated by a live trader using a live account not simply by a piece of software. Now we have some of our trading strategies that are semi-automated but it is our experienced trader that decides when to use any particular strategy.
We actually use a set of free expert advisors, but these EAs don't place any trades - they simply help us manage the trades after they are placed.
In conclusion, to further illustrate my point - please visit the New York Craigslist site & look at accounting/finance jobs and see if there are any trader jobs listed. You will find (most of the time) companies that are still hiring live traders. If the companies with the latest trading technology and the most sophisticated algorithms are not simply trading with bots then that should tell us something.
Saturday, July 28, 2012
Monday, July 16, 2012
Manage Daily Risk With Free Forex Trading Expert Advisors for MT4
We found these from a company called MQLHome.com. We thought we would pass this information on to our Forex Success Recipe subscribers & blog readers. There are actually 5 free EA's and they all can be found at this web site.
One of free 4x EA's that we use is called the MOMT 5 EA. We use it to manage our max daily risk. To use this MT4 EA - install it on your trading chart per the instructions. You will be able to set the max daily gain and the max daily loss. We do not use the maximum daily feature - so we simply set that value very high.
To calculate your maximum daily loss for your 4x acct - simply multiply your account balance times your preferred daily risk amount. For example, if your forex trading account has a balance of $2,000 and your only want to risk 5% per trading day - then you would input $100 in the "Loss_Limit" input field.
Now once your cumulative loss for the day reaches $100 - the EA will automatically close any other order that is opened for the rest of the day. This is a very powerful tool to prevent a large daily drawdown from taking place in your account.
Friday, July 13, 2012
The Sport of Forex Trading and Developing Mental Acuity
To illustrate this, let's think about sports for a minute. Both Forex trading and sports involve a high degree of mental focus. However, all sports include some type of limits. For example, in football you have 4 downs to get at least 10 yards and in baseball you get three strikes before you're out. Also, basketball gives you 24 seconds to make the shot or at least hit the rim.
Can you imagine any one of these games without the limits or the rules? It would be chaos and certainly not any fun to watch.
The rules in sports also provide the athletes a "mental break." Sometimes a coach will even step in and put an athlete on the bench - even if for a play or two. The coach is not necessary punishing the struggling player, but rather the coach is actually helping the player. Coaches understand psychology very well and often the player will come back with stronger mental acuity after his time out of the game.
Well, since Forex trading doesn't have any built-in rules - we have to create our own.
This is another crucial piece of Forex trading psychology. It's important to set some type of limits on each trading day. The currency markets are open 24/5 - so they do not provide any type of limits to prevent over trading. In addition, most traders do not have a coach "to take us out of the game to give us a mental break."
Therefore, we must be able to manage ourselves and know when to STOP trading for the day.
Here at The Forex Success Recipe, we use some specific rules to control our risk such as using a Max Daily Risk. If we ever reach -50 pips for the day - then we stop trading for the day.
However, some trading days require more of a subjective rule. For example, when we are negative from a few trades and then we still manage to at make at least a few pips - then we will often take the small gain and call it a day.
This can be compared to a football team that is on the 5 yard line and keeps struggling to get into the end zone. After multiple attempts and the failure to score 7 points, they will go for the field goal and settle for the 3 points. Even though the team didn't get the touchdown, they are still mentally better off by at least getting some points.
Even trading days with little or no gain should still be viewed as positive trading days. Maybe not in financial profits - but rather in the preservation of your mental acuity. Keeping your trading mind sharp is a must for your long term forex trading success.
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