[lucky12]

The Forex business is like most others. We go through fads and often times government regulations that change the way we operate our business.

Most recently, on an individual basis, new traders are likely to try out EA systems.
Automated trading systems provide the hope that even if you do not know how to trade, it will automatically place trades for you and preferably winning trades.

What a wonderful world we would live in if this was the way things really work. Imagine waking up each and every single day to open your trading account and finding more money. And all of the work is done while you are sleeping or at your current job.

It sounds like the way to an early retirement and prosperity. How proud your family would be if you could create a situation like this.

Reality is that most EA/automated trading systems fail. The reason is that there is no individual experienced trader confirming and analyzing the validity of each trade. Automated trading systems that work on their own do not take into consideration consolidation, market sentiment or momentum. If the EA does, it is usually incorporated into the trade with data that has already taken place and shows up in the form of an indicator.

Most people who use EA’s aren’t even aware of the trading system or techniques used in generating each trade. I find this difficult to understand. Why would somebody use live money to try and EA without understanding the techniques involved? Most providers of EA’s and alert services really don’t mention what their strategy is other than some basic indicator information and how they set up their charts.

And it’s possible that almost anyone with a decent chart program can create their own trading system.
There are hundreds of websites that offer EA’s either for sale or free and most of their testing is only done on the charts itself and usually within a few weeks to a few months of testing. In most cases there is no lengthy period of live trading to use as a study period to analyze its effectiveness and consistency.

My feeling is that an EA should be used along with a real solid education of a trading system. Find an EA that is generating trades which are confirmed by a live professional experienced Forex trader. This way you minimize potential losses but also find in EA that shares its techniques from the developer/professional Forex trader.

This way should anything happen to the EA service you will have a better understanding of the trading techniques and if you like them you can always incorporate them into your business.

Also, it seems that another trend is developing. I am reading more oftenn on forums that some brokers do not want their customers using EA’s on the live account. Before opening a demo or live account I would always ask the broker if they allow EAs to be used alive accounts.

Thanks for reading,
good luck trading
LC