Back in 2008 when commercial EA’s were entering the Forex market, some of us believed that if you have a good system, all you need to do is automate it, place it on a chart, “set and forget it” and you can then start planning your dream vacation. Over the years, many of us came to the realization that automated systems do not last forever. As markets are always changing we need to continuously adjust, tweak, or change our strategies to keep them functional.
The truth is that markets simply do not care about trading systems, and sometimes it may seem as if it’s trying to undermine them as well. Therefore, when using an EA, it’s imperative that:
- You fully understand the logic behind the system. (If you don’t know how the system it works, how will you know when it’s not working?)
- You monitor the markets and are up-to-date with anything and everything that can affect it.
- You are able to make calculated risk decisions for when manual intervention is needed.
We found that the best systems which work long term are ones where there’s a mix of automated and manual trading. For better or worse, we’ve seen traders who took EA’s and modified/tweaked it for their needs. Those who understood the system and incorporated manual intervention when needed did quite well.
One of the aspects of automated systems is that there’s no human emotion involved, however, although emotions can wreak havoc on any good system, sometimes human intervention is needed to preserve it. So, what if you don’t have the time to monitor the markets or don’t fully understand the system to know when/how to manually intervene, what are your options?
There are a few options, like managed accounts, signal services, and trade copiers which are all similar. You’re basically letting professionals do the work for you.
With Signals and Trade copiers, the provider usually gets a commission from each trade they initiate or a monthly subscription fee. With managed accounts, the provider usually gets a performance fee that is applied to the net gains of the client’s account. This keeps them motivated to always look out for the benefit of the client’s investment.
From all the managed accounts out there, the only one we can currently recommend is BinaForex.com. They have a solid track record with their “Quest” account which yielded over 612% since Nov. 2010.
Managed account features:
- Managed accounts tend to use private systems that are not available to the general public.
- There’s manual intervention by professional traders when needed.
- There’s no need for a VPS.
- Most managed accounts use a High-watermark performance fee structure. (You are only charged on net gains).
- There’s no need to worry about updates or adjustments to the system.
- No upfront payments or recurring subscriptions. Performance fees are usually deducted from your broker account.
- There’s no learning curve or trading experience needed to benefit from the system.
- There’s no need to monitor anything. You can just go about your day and hopefully, plan a nice vacation.
If you’re an experienced trader who has a good understanding of the market and are committed to spending time monitoring it, then Forex EA’s are a great tool for you to enhance your trading.
However, if you don’t have the time or resources to monitor the market, or do not have the essential background to understand it, then a managed account or a trade-copier is the way to go.
Please note: Forex EA’s still work, some very well. However, when using an EA it’s important to follow the 3 steps listed above, and you must also be ready to manually intervene with the system when needed.
We hope that this information has been of help if you’re involved with Forex trading.