Thu. Apr 2nd, 2020

Forex InfoBook

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Review Standards and Rules for analysis of MT4 EA

At Forex InfoBook, review of any MT4 EA is about setting standards and rules which can be used by traders to assess the automated strategy’s future trading potential and educate the trader about the risk to be expected when trading the strategy.

Forex InfoBook is not an affiliate or is not monetized by vendors of product featured in the reviews. The purpose of MT4 EA review is to enables traders select an automated Forex trading strategy based a set of well defined rules and standards. In this process, traders will also be able to set correct expectations from trading the MT4 EA and set risk as per data derived from the review analysis. Our aim to help retail traders to be successful in the long term without blowing accounts by running black box systems at insanely high risk based on vendors commercial interest driven sales pitches.

What are MT4 Expert Advisors (MT4 EA)?

MT4 Trading Robots or Expert Advisors (EA), are just a set of rules programmed in MetaQuotes Language (MQL) which runs on the MetaTrader 4 platform. The code dictates the condition for money management, execution, modification and closure of trades. The strategy contained may be built using very simple indicators like moving averages or a much more complex Neural Network or even a machine learning system.

All commercially sold MT4 EAs are packaged with no source code or real access to the actual strategy built into the software. This of course makes business sense for the seller of the EA. For the trader, these are nothing more than a black box which is expected to trade on their behalf. The decision to run a particular strategy – however logical and well informed the trader may be is finally solely based on what could be termed as Blind Trust.

Scammers and fly-by-night operators have marketed such Black Box systems terming them as the “holy grail” to novice traders only to destroy their accounts. Over the past few years, retail traders have become more better at identifying scammers and have stopped falling for the over-night-get-rich software peddled out by some vendors. Newbie traders still fall for that, but that is a different topic. This review is meant to for retail Forex traders who have a minimum of one year trading experience with automated or manual trading.

It is possible to auto trade profitably. However, traders need to differentiate between good and bad strategies. Understanding the basics is key to making profits with automated trading.

Minimum criteria for Review of a MT4 EA

Recommending a black box automated strategy is easy for sellers, affiliates and marketers for whom it is just a matter of making a commission on a sale. At Forex InfoBook, the review is more about setting a standard which can be used to assess the automated strategy’s future trading potential and educate the trader about the risk to be expected when trading the strategy.

Forex InfoBook has set a minimum basic requirements that need to be fulfilled even before the MT4 EA is considered for review. The most important criteria are listed below:

  • MyFxBook verified live trading account on a regulated broker.
  • Accounts run by third party is preferred to accounts run by the vendor.
  • Only Forex pairs/commodities offered by popular brokers will be considered for analysis.
  • Minimum trading history of three years.
  • If trading history is more than one year, the strategy can be considered for analysis if the live trading history matches the strategy test conducted using TickData Suite using real spreads and trading conditions like spreads + swaps.
  • Highest possible quality MT4 strategy tester data should be available for analysis at least from 2009 till the year of review.
  • Grids/Martingale systems may only be considered in exceptional cases.

Strategy Performance Analysis Method

The equity curve is the most common piece if information that attracts any traders to a automated trading system. This is one of the fatal mistakes that can be very expensive learning lesson for the trader. Equity growth can be deceiving and is only reflective about the good or bad stints of the strategy. Equity growth can be manipulated, hides behind risk management and has a tendency to hide the strategy’s weakness.

Forex InfoBook does not consider the equity curve/capital/risk used by the vendor or third party reference account. The EA’s trading history is used to derive the pip gain/loss and used in all analysis – this provides a consistent basis for strategy analysis and removes all other factors that could mask performance of the strategy.

Traders can benefit from knowing before hand the trading journey they are about to begin when they attach the EA to the MT4 holding their hard earned capital. Better still, before spending on purchasing a hyped up EA and losing money by trading a total black box.

Forex InfoBook has completed review of the following MT4 EAs which meet the basic criteria:

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