Part 1: About Trading and Forex
I’ll be honest: automated trading
is not for lazy people. It’s not about installing a bot and waiting for money to fall from the sky. If you believe that, you can stop reading.
Now, if what you want is to use algorithmic trading as a real tool, without fairy tales or magic formulas, stay a bit longer.
This text is for:
- Those who want to get into trading without relying solely on their “intuition” (also known as “guessing badly”).
- Those who already have my Expert Advisors (EAs) and don’t want to let them run without understanding absolutely anything.
- Those who are tired of blowing up accounts because they don’t really know what they’re doing.
There’s no filler here or blackboard theory that’s useless in practice. We’re getting straight to what matters: how to trade intelligently and make technology work for you (not the other way around).
Why You Need to Understand Automated Trading and Forex
An uncomfortable truth: 90% of people lose money in trading. Not because the market is “manipulated” or due to “bad luck.” They lose because:
- They trade without a strategy (pure improvisation).
- They’re driven by emotions (fear, greed, revenge).
- They don’t understand what they’re doing (but expect miracles).
Automated trading is not a shortcut to avoid learning. It’s a great tool, yes, but only if you use it wisely. A good EA removes the emotional factor and trades based on logic, statistics, and discipline, but it doesn’t perform magic.
Why Forex?
- It’s the most liquid market in the world.
- It trades 24/5, with no waiting or halts.
- With the right amount of volatility, opportunities arise constantly.
However, if you think you can leave a robot running without understanding what it does, you’ll blow your account before you even notice.
Basic Trading Concepts
Before we dive into robots, you need to understand the essentials. If you don’t know what you’re trading, not even the best EA in the world will save you.
Forex: What It Is and Why It Interests Us
The foreign exchange market (Forex) moves over 7 trillion dollars a day. Here, you don’t buy stocks or cryptocurrencies, but rather currency pairs.
A simple example:
- You buy EUR/USD → You’re betting that the euro will rise against the dollar.
- You sell EUR/USD → You’re betting that the euro will fall and the dollar will rise.
The price changes according to supply and demand. Your job as a trader is to take advantage of these ups and downs to generate profit.
Why Is Forex Interesting?
- High liquidity. There’s always a counterparty to buy or sell.
- Open 24/5. You don’t have to wait for the market to “open.”
- Leverage. You can trade with more capital than you actually have (with the caution that implies).
- Constant opportunities. There are dozens of pairs and multiple strategies.
Why Do We Use Forex for Automated Trading?
- You can start with small capital.
- The high liquidity allows EAs to run without too many execution problems.
- You can profit in both rising and falling markets, opening up many operational possibilities.
Brokers: Who They Are and Why They Matter
The broker is your bridge to the market. If you choose poorly, it doesn’t matter how good your strategy is: you’ll lose money due to high fees, slow execution, or even price manipulation.
Types of Brokers
- Market Maker. Your counterparty is the broker itself. This can create conflicts of interest, as they profit when you lose.
- ECN (Electronic Communication Network). They connect directly to banks and liquidity providers. Low spreads but with fixed commissions.
- STP (Straight Through Processing). They route your orders to various liquidity providers. It’s a mix between Market Maker and ECN, without direct broker intervention.
How to Choose a Good Broker
- Solid regulation. Look for serious regulatory bodies like the FCA or ASIC.
- Low costs. Tight spreads and reasonable commissions.
- Fast execution. Fewer delays mean less slippage.
- Compatibility with MetaTrader 5. Essential if you’re using our EAs.
A poor broker can be the difference between earning well or watching your profits vanish due to fees and poor execution.
Here’s my affiliate link to one of the best brokers I use: https://my.dooprime.com/links/go/52520
VPS (Virtual Private Server): Your EA Running 24/7
If you want to take automated trading seriously, you need a VPS. You can’t rely on your PC or home internet connection. One power outage or lost connection, and goodbye to your trades.
A VPS is a remote server where you install MetaTrader 5 and leave your EA running without interruptions.
Advantages of Using a VPS
- Continuous operation. Your robot keeps trading even if your computer is off.
- Less latency. If the VPS is near the broker’s server, orders get executed faster.
- Greater stability. You won’t worry about power outages or home internet issues.
If you want your EA to work properly, a VPS isn’t optional—it’s a necessity.
Introduction to Expert Advisors (EAs)
What Is an Expert Advisor and How Does It Work?
An Expert Advisor (EA) is a trading robot that trades automatically according to predefined rules. It has no emotions, no doubts, and doesn’t improvise. It analyzes the market and executes trades based on its programming.
While you sleep, the EA keeps trading, stress-free and impulse-free.
History and Evolution of EAs
In the past, trading was 100% manual. With the advent of online platforms, automation arrived. Nowadays, EAs have become more sophisticated, incorporating:
- Multiple combined strategies in one system.
- Artificial intelligence to identify patterns.
- Advanced risk management to optimize each trade.
Components and Logic Behind an EA
An EA doesn’t “guess” the market. It’s based on four pillars:
- Entry/exit algorithms. Determine when to open and close trades.
- Risk management. Calculate how much to risk and how to protect the account.
- Market filters. Avoid trading during dangerous times (high volatility, news events).
- Optimization rules. Adjust trading to different market conditions.
Advantages and Disadvantages of Using EAs
Advantages:
- They trade continuously 24/5.
- They remove emotions (fear, greed, anxiety).
- They can handle multiple assets and strategies at once.
- They allow backtesting to test and optimize before going live.
Disadvantages:
- They don’t perform miracles. A poorly coded EA will yield poor results.
- They require a good VPS and a reliable broker.
- They can fail in extremely volatile markets or those with low liquidity.
Use Cases and Ideal Scenarios
- Little time to trade. The EA works while you focus on other tasks.
- Diversification. Combine multiple EAs for different pairs and strategies.
- Consistency. Once configured, it follows the rules without improvising.
Automated trading is not a shortcut; it’s a tool. Used correctly, it can set you apart from an impulsive trader to one who trades with a solid system.
MetaTrader 5 (MT5): The Platform for Automated Trading
Introduction to MT5
If the EA is the brain, then MetaTrader 5 (MT5) is the body. Created by MetaQuotes, it’s the evolution of MT4: faster, with advanced tools and better order management.
If you’re serious about EAs, MT5 provides the perfect environment for them to operate without technical limitations.
MT5 vs. MT4: What Really Changes?
- Higher speed and efficiency. Orders with lower latency.
- Advanced backtesting. Realistic simulations and multi-asset testing.
- More timeframes. It offers 21 instead of MT4’s 9.
- Advanced order types. Types like Buy Stop Limit and Sell Stop Limit.
For manual trading, MT4 is still functional. But for automated trading, MT5 is the better choice.
EA Installation and Configuration in MT5
When you purchase an EA from the Market, installation is done directly from the MT5 platform. There’s no need to manually move files.
Once installed, you’ll find it in the “Expert Advisors” section of MT5’s navigator.
- Open the chart of the pair you want to trade.
- Drag the EA from the navigator to the chart.
- Activate the “Algo Trading” or “AutoTrading” button to start it.
How to Check the EA’s Operation
The Experts Log (the “Experts” tab in the “Terminal” panel) shows:
- Executed orders. Buy and sell confirmations.
- Errors or warnings. System messages if there’s a problem.
- Startup and closing data. Key info when the EA starts.
Troubleshooting and Optimization
- EA not trading. Check that “Algo Trading” is on and review messages in “Experts.”
- Orders rejected. The broker might have restrictions on spreads or minimum lots.
- High latency. Use a VPS to improve speed.
In automated trading, every millisecond counts. If your EA isn’t responding well, check these points before blaming the market.
V. Testing and Optimizing EAs
Running an EA live without prior testing is like driving without brakes. To avoid nasty surprises, backtesting and optimization are essential.
Backtesting: How to Test an EA with Historical Data
A backtest simulates how your EA would have traded in the past. It’s not a crystal ball, but it helps you see if the strategy is solid or a total trap.
- Open the Strategy Tester (Ctrl + R).
- Select your EA and choose the currency pair, timeframe, and date range.
- Set the simulation mode (fast or detailed).
- Click “Start” and analyze the results.
Backtesting limitations:
- Historical data doesn’t exactly reflect future conditions.
- Spread, real execution, and liquidity can affect real results.
Optimization: Adjusting the EA to Improve Its Performance
Optimizing an EA means testing different settings (distance between trades, lot size, risk management) to find the most efficient configuration.
- In the Strategy Tester, enable “Optimization.”
- Select the parameters you want to test.
- Choose the optimization algorithm:
- Complete. More accurate, but slower.
- Genetic. Faster, searches for optimal patterns.
- Run the test and check the best results.
Beware of over-optimizing (overfitting). An EA can look perfect in backtests, but if it’s too tailored to past data, it may fail when the market changes. The key is to find a balance between adjustment and robustness.
Live Trading
Testing in demo is one thing; running your EA live is another matter entirely. Many people lose money here due to poor risk management, impatience, or simply lack of preparation.
Preparing for Live Trading
- Test your EA in demo for at least a month. If it fails in demo, it’ll fail live.
- Compare spreads and execution in live vs. demo. Some brokers offer different conditions.
- Start with small lot sizes. Don’t risk a lot from day one.
- Golden rule: Never trade with money you can’t afford to lose.
Risk Management: Survive to Win
Trading isn’t about always winning; it’s about controlling losses so that negative streaks don’t wipe out your account.
If you use Grid or Martingale strategies:
- Don’t use huge lot sizes. A low initial volume gives you room to handle drawdowns.
- Watch how many positions you open. A grid that’s too dense can strangle your account if the market trends strongly.
- Set limits. Don’t put all your capital at risk. It’s better to be conservative than to lose everything in a bad streak.
The Psychology of Trading: The Real Enemy Is You
- Don’t change parameters impulsively after a loss.
- Don’t check every five minutes. Anxiety causes mistakes.
- Accept that losses are part of the business. Even the best systems have drawdowns.
The key to success is sticking to your strategy and not sabotaging yourself.
Live Trading Strategies
- Conservative. Low lot sizes, wider grid spacing. Less risk, moderate gains, stable trading.
- Aggressive. Higher volume and tighter grid. Potential for bigger profits, but you need more capital to handle pullbacks.
- Hybrid. Multiple EAs on the same account, each with different parameters, to diversify and reduce risk.
Choose the strategy that suits your risk tolerance. In trading, the one who manages risk well survives, not the one who risks the most.
VII. FAQ – Frequently Asked Questions
Questions About EAs and How They Work
Does an EA guarantee profits?
No. It’s just a tool. Its results depend on its programming, market conditions, and risk management.
How many currency pairs can an EA trade?
It depends on the design. Some are optimized for one pair; others support multiple pairs simultaneously.
Do I need to keep the EA running at all times?
Yes. Ideally, use a VPS so it can trade 24 hours a day, five days a week.
How much capital do I need to start?
It varies by EA, but it’s wise to have a cushion of several hundred dollars to handle potential drawdowns.
Questions About Backtesting and Optimization
Why does my EA do well in backtests but fail live?
The backtest uses perfect historical data. In live trading, factors like spread, slippage, broker execution, and possible over-optimization come into play.
How often should I optimize my EA?
There’s no fixed rule, but many traders adjust parameters every 3-6 months or when they see substantial changes in performance.
Can I do backtesting on a live account?
No. Backtests are always done with historical data. To test without risking money under real conditions, use a demo account.
Questions About MetaTrader 5 and the Experts Log
Why isn’t my EA opening trades?
Check that “Algo Trading” is active and look at the “Experts” tab for error messages.
Can I use MT5 on my phone to run EAs?
No. The mobile app only lets you monitor trades, not run EAs. You need the desktop version for them to trade.
Questions About VPS and Brokers
Is it mandatory to use a VPS?
No, but it’s highly recommended for connection stability and to avoid interruptions.
How do I know if my broker is trustworthy?
Check its regulation, reputation, competitive spreads, and whether it allows EAs without restrictions.
Questions About Strategies and Risk Management
How do I choose the best lot size for my EA?
Start with small lots. Don’t risk more than a small percentage of your account per trade.
Can I combine multiple EAs in the same account?
Yes, but be sure they’re not trading the same pair with conflicting strategies, and that the total positions aren’t excessive.
What if my EA starts losing money?
Don’t panic. First analyze if the market has changed and if the EA is still valid. Check your settings and assess whether losses are within expected ranges or if adjustments are needed.
Automated trading isn’t magic: it requires monitoring, adjustments, and patience.
Conclusion and Next Steps
If you’ve made it this far, you already understand that automated trading isn’t a blind bet. It’s a powerful tool, but only if combined with strategy, testing, and risk management.
We’ve covered the essentials: how EAs work, how to install them, test them, optimize them, and how to go live without making rookie mistakes.
What’s next?
Don’t just stay in theory. Launch your EA, run tests, review data, and adjust as the market changes. Automated trading requires constant evolution, and the key lies in adaptation.
See you in the markets!
Part 2: Automated Trading with Grid and Martingale
I. Introduction
Now we go one step further: Grid and Martingale strategies. Yes, they have a reputation for being risky, but with the right settings and risk management, they can be powerful allies to leverage the market’s oscillatory nature.
This module is aimed at those who already master the basics of EAs and want to delve into a strategy that opens orders at fixed price intervals and increases positions when the market moves against them.
II. Basic Concepts of Grid and Martingale
Grid: places buy or sell orders at fixed price intervals (e.g., every 20 pips), capturing market movements without predicting the exact direction.
Martingale: increases the position size if the market moves against you, aiming to recover losses on the next retracement.
The logic behind these strategies: the market rarely moves in a straight line; there are always swings. A well-calibrated system takes advantage of retracements to close positions in profit.
III. Advantages and Risks of Trading with Grid and Martingale
Advantages:
- You don’t need to predict market direction with pinpoint accuracy.
- They work well in sideways markets with frequent pullbacks.
- They are 100% automated, reducing psychological pressure.
Risks and How to Minimize Them:
- Accumulation of positions. If the market moves in a single direction without retracing, the grid fills up with orders against the trend. Solution: use small lots and space out orders properly.
- Over-leveraging. Increasing size too much can blow up your account. Solution: set low multipliers and ensure sufficient margin.
- Prolonged drawdowns. There can be long periods of floating losses. Solution: adopt a conservative approach and constantly monitor the EA.
IV. Risk Management in Grid and Martingale
The key is controlling the accumulation of orders and maintaining a balance between profitability and safety:
- Low initial lot size. Avoid starting with high volumes that could spiral out of control.
- Prudent multipliers. Instead of doubling each position, use more moderate values (1.2 – 1.3).
- Well-spaced grids. A grid that’s too tight generates too many orders. Better to space out and trade with more control.
- Adequate margin. Don’t trade with the bare minimum. A capital buffer allows room for adverse moves.
V. Testing and Optimizing Grid and Martingale EAs
Before live trading, test your EA thoroughly:
- Backtesting. Evaluate its historical performance and see if it’s consistent.
- Partial optimizations. Fine-tune parameters like grid distance, multiplier, and initial lot size, but avoid overfitting.
- Demo and cent accounts. Before risking real capital, test in a demo or cent account to see real market behavior.
Conclusion: Control Is Key
Grid and Martingale strategies can be very profitable, but only if used with discipline and intelligent risk management.
You don’t need giant lot sizes to win. A conservative and well-optimized approach can harness market swings without putting your entire account at risk.
If you already master the basics and want to take your automated trading to the next level, try our Grid and Martingale EAs on your VPS with a solid plan.
See you in the markets!