Foreign currency exchange is the most volatile market and available for trading 24hours a day. Everyday there is 3 trillion worth of currency change hand on the market. MT4 is a trading platform for trader to buy and sell currency through a broker account. This trading platform provides charting and programming language. This programming which is commonly called Expert Advisor (NASDAQ:EA). Trader can program their winning strategy into EA and use the simulator to back test them. Back testing will show results base on historical currency price, which is similar to paper trading.
I will explain some factors which will help the backrest results to be comparable to live result after your EA is enable on live trading account. These factors will help you in your simulation results but you have to understand that trading involve risk.
1) Adding Delay in your EA.
In the simulator, delay is not importance and serve as a pause while executing in back testing mode. But to live trading is actually waiting for price changes in the live server and serve as a delay task for trade opening at server side. The historical data is stored in smallest data of 1 minute interval and a delay of 1 or 2 minutes will help live data server to execute with similar results as back testing.
2) Choose Indicator correctly.
Most common trading platform uses 1 minute (M1), 5 minutes (M5), 15 minutes (M15), 1 hour (H1), 4 hours (H4), 1 day (D1) and 1 week (W1) charts. The trading platform also have common chart indicator like Simple Moving Average (NYSE:SMA), Exponential Moving Average (NYSEMKT:EMA), Common Channel Indicator (NYSE:CCI), Relative Stochastic Indicator (RSI) and Bollinger Band (NYSE:BB). By experiences, choosing a chart time frame of M15 or H1 is idea as this can effective project the trend of the currency in the next few hours to few days. Using of Open, Close, High and Low values of M15 or H1 will yield better results thus closing the difference between Demo and Live trading.
3) 5 to 8 pips of additional stop loss.
Most broker provides a Bid-Ask difference (Slippage) of 2 to 5 pips depending on the currency pair. This Bid-Ask is the buy and sell difference when you execute trades. Many of the EA does not include this slippage and thus product very different results when trading live account. Base on my experiences, you have to put in minimum 30 pips additional to your stoploss. This is because during outbreak of news, the currency slippage may increase up to 20 or 25 pips, and cause many unexpected losses to your live account.
You always have to back test your strategy again when includes the above factor into your EA and review the results. Many good strategies is fine tune to provide maximum results in all trading condition. You can back test using various parameter and different indicator. The results produce will vary with different stop loss and delay.
Finally, the execution speed and fulfilling of trade orders by the live server are also import to yield positive trading results. Always choose a popular trading partner, start live trading after you tried demo trading with positive winning results.