Expert Advisor (EA)

What an expert advisor is

A trading platform shows prices and lets you place orders by hand. An expert advisor is a small program that does that for you, inside the platform. It reads prices and indicators, applies its rules and sends orders. Because it lives in the platform it can use the platform's own data, charts and strategy tester. People also call EAs forex robots, trading robots or simply bots. What separates one from another is the rules inside, not the name.

The rules can be anything: a moving average cross, a grid, a martingale ladder, a breakout. So an EA is not a strategy. It is a delivery method for a strategy, and it can be as safe or as dangerous as the strategy it carries.

Lot size is the real risk setting

Many EAs use a fixed lot size set by the user. A fixed lot means a fixed dollar loss per stopped trade, whatever the account holds. Take a made-up pair quoted in dollars, where one pip on a standard lot is about $10. A 0.10 lot with a 20 pip stop loses 20 x $10 x 0.1 = $20 when stopped. What that means depends entirely on the account.

The same EA with the same settings risks 4.0% of the small account and 0.04% of the large one. A setting that was safe on the account the author tested is not safe on yours. The lot size calculator and the position size calculator turn a percent risk into a lot for your stop.

How an EA fails

• Costs. Spread, commission and swap are paid on every trade. An EA that trades often with a small average gain can be wiped out by them. See spread and slippage.
• A backtest that was too kind. A strategy tester builds prices from stored data, and how it does so differs by platform and setting. Check what yours uses, since coarse data can fill trades that would not have filled. This is the testing problem in backtesting.
• Overfitting. Many EAs are tuned until the backtest curve is smooth. A smooth curve on tuned data often means overfitting.
• Ladders and averaging. A martingale or grid EA wins often and loses rarely and large. It can look perfect for months, then fail in one move. The martingale calculator shows the exposure. After five losses in the made-up ladder the total is $620, which is 31% of a $2,000 account.
• Running conditions. An EA only works while the platform runs. A dropped connection, a restart or a time change can leave trades unmanaged.

How to check an EA before it touches money

Read what it does in plain words, including how it sizes. Find its worst case: the largest position it can hold and the loss if the stop is missed. Run a backtest with pessimistic costs and keep a later part of the data untouched. Then run it on a demo or paper account, and after that a small live trial. A sales page showing a rising curve is not a test.

What this page does not tell you

It does not say that any EA makes money, or that they do not. It shows how lot size and ladders set the risk and where the failures hide. It does not describe the behaviour of any named product.