Forex Signals vs Expert Advisors

The advantages and disadvantages of both products are discussed widely within the industry, with there being no common conclusion as to which is better. The bottom line is that both trading methods have their uses with retail traders usually preferring one over the other depending upon their individual trading style and risk profile. This article aims to provide a breakdown of the options available to the retail trader.

Receiving and Trading Forex Signals

Forex signals are usually provided by a human trader or a robot capable of analysing current market conditions. These signals can be sent via email, instant messenger or accessed via a community trading platform and are designed to be taken and entered manually into MT4, as a buy or sell order depending upon the trading opportunity identified. Each signal will usually contain the chosen currency pair, an entry price and a stop loss and take profit level. The size of the order, which will then determine how much money you stand to make or lose (the pip value), is up to the trader.

Trading with an Expert Advisor

In contrast, an Expert Advisor (EA) is a piece of software which will automatically open trades on your behalf, directly into your MT4 account. No alert or signal will be given unless specifically requested. The data required to open the trade will be automatically entered based upon the opportunity identified by the EA. The size of the order will be based upon the customisable settings you will have entered when setting up the EA. Each trade will be closed when the selected take profit levels have been reached, the stop loss limit has been reached or if you choose to close the trade manually.

So Which is Better?

By now you yourself may have a preference in what works best for you.

Trading Forex signals manually gives you much more control over your account. You have the ability to analyse each trade and decide if you want to place it. In fast moving markets this can be difficult as you can quickly find that the current price of the currency pair has moved to an unfavourable level, reducing the scope for gaining the desired level of pips. With human Forex signals, you also have to factor in that they may not always be consistent in quality as humans have the emotional burden of performance anxiety, something that just doesn’t affect software or robots.

Trading with an Expert Advisor makes life a little simpler as no direct interaction is required. With an EA running, you are free to engage in other activities whilst trades are placed on your behalf. It should be noted that EAs are able to open multiple trades at a time so good money management should be practised to ensure that your account can withstand any losses.