Forex is the largest trading market bigger then all the stock market combined in the world. Every day more then 3 trillion worth of currency are traded on a 24 hours time frame except weekend. Expert Advisor is a program to automate your trading strategy to harness the benefits of this large Forex market.
Forex also can be call FX or commonly known as Foreign Exchange Market. This is a universal market where trader buy and sell currency on a common platform. Different from stock and shares, the currency are paired up and price accordingly to the market floating value. This means the price will move up or down depending on demand and supply.
Commonly traded pair are US dollar / Japan Yen (USDJPY), Europe Euro / US Dollar (EURUSD), Great Britain Pound / US Dollar (GBPUSD) and Europe Euro / Japan Yen (EURJPY). These are used for import and export, including bank transform rates and commodities. More then 70% of the activities are traded with the 4 major country currency US Dollar, Great Britain Pound, Europe Euro and Japan Yen.
Forex can be traded through managed account, dealing desk brokerage firms and online internet trading. Due to the widespread and popular internet, more and more people are trading Forex themselves rather then thought fund manager. You can sign up for a trading account and start trading Forex after you funded in money.
Trading Forex is similar to stock and shares where you buy low and sell high to earn the profit from the 2 price difference. Buy in Forex, since you are using currency to buy currency, you can actually sell high first then buy low later and earn profit from the 2 price difference. This is what makes Forex a unique trading market.
There are plenty of indicators and charts for you to use to determine the price direction. Technical trader often uses support and resistance to determine the trend. Fundamental trader often uses economic figures and market news to determine breakout and reversal. There are also conventional traders who uses both technical and fundamental to achieve a winning strategy.
A winning Forex strategy will require a set of rules to follow and a money management system to avoid margin call. Following of rules is important so your emotions will not affect your trading. Having a good money management can compound your profits very fast in a very short timeframe. Having a bad money management can cause your trading balance to go very low in a short time.
Expert Advisor (NASDAQ:EA) is a programming language from MT4 (Meta Trader 4) that transform your forex winning strategy into a program that can run automatically executing your designated trades depending on your setup rules and strategy. This program enabled you to earn passive income after you activated it on to your trading platform.
Selection of Expert Advisor is very important and many factors are important to get a profitable program. A good Expert Advisor program can be back tested to yield high profit factor, low maximum draw down and high winning rates. Profit factor (NYSE:PF) is simply divided your winnings over losses. A profit factor of 2 and above is considered a good program. A profit factor of 10 and above is excellent.