What Is An MT4 Expert Advisor? Plus How To Install One (VIDEO)
In this five minute video, I’m going to show you what an expert advisor does, and how to install one for MetaTrader 4 trading platform. You can follow along using a free OANDA demo account by clicking the link below this video.
Register for a free OANDA MT4 demo account here.
An expert advisor, also commonly to as an EA, is a trade robot that automatically places trades for you. They work using mechanical rules that can be described using a series of if-then statements.
Moving average crossovers are the most well known mechanical trading systems. The rules for this system are basic: If the fast moving average crosses above the slow moving average, then buy at market. If the moving averages cross in the opposite direction, then close the trade. When an MT4 trading platform is live with moving average crossover EA, the platform sends trades whenever the moving averages cross.
Expert advisors also control the position size entering the market. Trading a $2,000 account is not the same as trading a $100,000 account. It’s important that the position size of trades take the account equity into consideration before placing trades. Regardless of the EA that you use, you should expect the expert advisor to provide you with the ability to set a risk level that is appropriate for the size of your account.
When you’re sleeping or working at the office, the expert advisor looks for trading opportunities. The EA automatically sends trades and exits them. You have to leave your computer on in order for an expert advisor to function.
Traders also like the fact that an EA never decides to take trades that don’t match the desired setup 100%. Discretionary mistakes are widely considered a major source of unnecessary losses. When the computer runs an expert advisor, it enforces a certain amount of discipline on the trader.
Expert advisors also come with some downsides. Traders love having the ability to backtest to see how their EAs did in previous market conditions. Keep in mind that past performance isn’t necessarily indicative of future results. I’ve seen plenty of EAs that make money, then fall apart at some point in the future.
You also face the risk of technical problems. Computers crash, electricity goes out, the internet stops working. If any of these things happen, your EA is not able to manage your trades.
An expert advisor is simply a file of computer code with the file extension .mq4 or .ex4. Both types are valid. Common sites that offer free expert advisors for download are:
You can also buy expert advisors on the internet. Any Google search with the words “expert advisor” will return legions of sites wanting to sell you an EA.
My personal experience is that about 2% of the robots for sale are any good. The vast majority are internet marketers trying to part you from your money in exchange for junk products. The people selling EAs on the internet make money regardless of whether or not their claims make you profits or losses. Their incentives don’t line up with your best interests.
I always recommend that traders in search of a strategy review the free expert advisors for sale on the internet. Aside from the fact that they’re free, the biggest advantage is that you know and understand how they work. The idea of trusting a pure black box with thousands of dollars in capital never sat well with me.
All trading systems experience losses, even profitable ones. Knowing why an EA places trades and how it works can be the critical factor that convinces you to stick with a winning strategy during a drawdown. You always have the ability to turn an EA off. You’re likely to do just that if you don’t know why you’re losing.
Wherever you find one, you’ll want to download it and save it somewhere easily accessible. I always save important files to my desktop so that I know where to find them quickly.
Assuming that you’ve found an EA you’d like to use, start the installation process by closing MT4. We have to do some copying and pasting to bring in new files.
Right click the expert advisor that you downloaded. Select “cut” from the drop down menu.
We now need to navigate to your MT4 installation folder. Push the Start button, then follow through to My Computer. The location for OANDA is C:\Program Files\OANDA – MetaTrader\experts (click through folders to get to the path).
Now that you’re in the experts folder, right click. Choose paste.
That’s it. That’s the process to install an Expert Advisor.
I’m going to reopen MetaTrader to show you that the EA is correctly installed. Double click the icon on your desktop.
If you don’t see this Navigator window open on the left side, click on View / Navigator. You can expand or collapse your list of expert advisors by clicking the plus or minus sign next to the words “Expert Advisor”.
The EA sits on your computer. If the power or internet has ever gone out in your home, you know that leaving the computer on 24/7 comes with some risks.
Traders with larger balances using opt to use a VPS, which stands for a virtual private server. That’s a fancy way of saying that they’re renting computing power from a data center.
Data centers are responsible for guaranteeing that the electricity and internet are available. Most vendors issue a 99.9% up-time guarantee, meaning that everything works properly. Placing your EA on a VPS is a great way to ensure you’re not relying on your home resources, which have a higher risk of going down – you probably don’t have an automatic diesel generator that instantly turns on whenever the power goes out. Data centers do. Most VPS vendors charge anywhere from $30-45/month for services that are adequate for running most expert advisors.
You can start running the expert advisor that you’ve chosen in a free MetaTrader practice account from OANDA. Click the link below this video to open your free demo account.