DAY 4: Prerequisites for Operating EA — Basic Mechanisms You Should Know

Last time I talked about the objectivity gained by introducing an Expert Advisor (EA) and the benefits of reducing risks from emotions and doubt.
This time I will concisely organize the basic mechanisms and preparations you should know when actually operating an EA.
Let’s focus on points that you can understand in advance to feel secure and start smoothly.

Basic structure of an EA

An EA is an automated trading program that runs on a trading platform (most commonly MT4 or MT5).
Therefore, the following elements must be in place.

• Trading account and platform
  Open an account with an FX company, etc., and prepare a platform such as MetaTrader (MT4/MT5).
  Since brokers and platforms have various specifications, it is also important to check compatibility with the EA, server speed, spreads, etc.

• EA files (.ex4 / .ex5, etc.)
  By installing the compiled program file on the platform, automatic execution of trades is performed.
  If you develop your own EA, you would create the program in MQL language (MQL4 for MT4, MQL5 for MT5).

• Consideration of VPS (virtual private server)
  To run the EA 24 hours stably, you need to keep your computer on and maintain a stable connection.
  Using a VPS offers benefits such as a more stable network environment and reduced risks from power outages or device failures.

MT4 / MT5 basic settings

When introducing an EA, confirm the basic MT4/MT5 settings.

• Settings to allow automated trading
  Check that automated trading is enabled from the “Auto trading” button on the menu bar or in the options.
  If it is disabled, the EA will not operate.

• Required margin and leverage
  Setting margin and leverage is important to determine acceptable risk per trade. Depending on the EA logic, the EA may take positions exceeding expectations, so a more generous setting is desirable.

• Spread and account type confirmation
  Scalping-type EAs are sensitive to wide spreads. Consider account type (ECN, STP, etc.) and whether there are trading fees to determine if the environment allows the EA to perform effectively.

EA parameter settings and tuning

EA typically provides various parameters such as stop loss width, take profit width, lot size, and time filters.

• Parameters you should minimally understand

  • Risk management：Stop loss width, magic number (trade identifier), etc.

  • Logic-related：Indicator period and threshold, trend-detection settings, etc.

• Tuning via backtesting and forward testing
  In real markets, slippage and execution speed have impacts, so it is important to conduct forward tests on a demo account or a small real account in addition to backtesting and fine-tune the settings.

Regular checks lead to安心

Some people think “EA is fine to leave as is.” However, markets change daily. When the market environment moves significantly, you may need to revisit the settings as needed.

• Make it a habit to review on weekends or month-ends
  Reviewing operating status and trade history at regular intervals helps detect unexpected losing streaks or breakout failures early.

• Be cautious if there is a divergence from backtest results
  If forward testing or real trading yields results clearly different from backtests, consider parameter adjustments or changes in market conditions. Regular investigation and tuning can prevent large losses.

Today's summary and next preview

• To operate an EA, you need a basic system environment: trading account, platform, EA file, and VPS.

• Understanding MT4/MT5 settings and EA parameters helps reduce troubles and enables smoother operation.

• Regularly check the EA's operation on weekends or periodically and adjust to changing market conditions.

In the next article (DAY 5), we will discuss the theme “How to choose a good EA — what constitutes a good EA,” focusing on indicators to watch when selecting an EA and important points beyond win rate. This is a crucial aspect that can determine the success or failure of EA operation, so please look forward to it.

Introduction to the EAs I sell

If you are interested, please take a look at the EAs I sell.
https://www.gogojungle.co.jp/users/147322/products

Why not set up a more stable trading foundation by operating an EA?

In the next article, together we will think about what constitutes a “good EA.”
Please click “Read more” and continue reading.