Note:
We advise that you avoid Forex EAs that recommend working only with a specific broker, as this could lead you to lose your deposit. For trading with Forex EAs, we recommend choosing RoboForex as the company has great expertise in the area and offers the best combination of low commissions and advanced technical support.
Forex market offers many instruments to make trading easier and to improve its results. Expert advisors are one of the most popular instruments of this kind. However, just like all other instruments in the Forex market, expert advisors (EA) can both bring profit and lead to a loss of a part or the entire deposit of the trader. Traders Union experts conducted a research to find out how often successful traders use EAs and whether traders, particularly the beginners, should resort to such instruments when trading in the Forex market. The research of the team of TU analysts helps traders borrow the experience of their successful colleagues and make the choice in favor of one or another method of trading. Based on the results of the research, the TU team was tasked with providing key characteristics of the existing trading methods in the Forex market and finding out which method of trading is the preferred one by successful traders: manual trading, fully automated trading with the use of Forex Expert Advisors or partially automated trading.
In order to fulfill the task and obtain a trustworthy answer to the question of the research, the team of TU analysts surveyed 2,800 successful traders, trading Forex via the brokers from the Top 10 of the Traders Union rating. As a result, TU experts collected objective data that shows the experience of successful traders and were able to determine the best method of trading in the Forex market.
In addition, TU research provides answers to the following questions:
Which methods of trading exist in the Forex market?
Which methods of trading do successful traders employ?
What are the pros and cons of each method of trading?
The results of the research are based on in-depth analysis of the issues raised by the TU’s analytical team. Therefore, the traders from all across the world will be able to apply them when choosing their trading method in the Forex market.
Forex is a global financial market for exchanging currencies. The participants of Forex trading include central banks of different countries, companies, top international businesses, commercial banks and private traders.
Forex broker is a financial services company performing the function of an intermediary between the buyer and the seller of currency in the Forex market.
Trade deposit means the funds deposited by a trader to his/her account with a Forex broker with the purpose of performing trading transactions.
Volatility is a term used to describe fluctuations of trading prices within a specified period of time. It is believed that the higher the range of price fluctuations, the higher the volatility.
Slippage is the difference between the actual price of the order execution and the price set by the trader when the order is opened.
Spread is the difference between the best buy price and the best sell price in currency exchange.
Trading strategy is a set of rules and algorithms used for making decisions when trading in the Forex market. The trading strategies are divided into those based on technical or fundamental analyses, and there are also combined trading strategies.
Technical analysis is a type of asset evaluation based on the assumption that with similar market conditions the price of the asset will change in the future in the same manner that it had in the past.
Fundamental analysis is a type of asset price forecasting based on macro- and microeconomic indicators and their changes. It assumes that as a result of the change of the economic indicators, the price of the asset will change accordingly.
Expert Advisor is a trading system that automatically closes and opens trades based on the preset rules.
Having reviewed the opinions on trading methods in the Forex market available in the open sources (forextraininggroup.com, circlemarkets.com, onlinebroker-reviews.com, thebalance.com, thefxview.com and others), TU experts came to a conclusion that there is no agreement of opinion on the best trading method in the Forex market. Some traders are convinced that exclusively manual trading should be used. Others claim that using Forex EAs is the best option. Some traders who use the advisors prefer fully automated trading, while others are the supporters of semi-automated systems. There are also those in the Forex market who prefer to combine automated and manual trading methods, when some trades are opened using manual trading and some – using EA.
TU experts have tasked themselves with finding out which opinion of the above is true and which method is the best for trading in the Forex market.
Having analyzed information available in open sources, the experts of TU analytical team reached a conclusion that there are the following trading methods in the Forex market:
Manual trading.
Automated trading.
Semi-automated trading.
According to the statistics available in open sources, around 25% of the trades in the Forex market are performed in the automated mode, another 30% – in semi-automated mode and the remaining 45% account for manual trading.
Picture 5.1. Trading methods in the Forex market, %
Manual trading
Manual trading means that the traders analyze all market events, technical indicators and fundamental news on their own and based on that open and close trades in the Forex market. This trading method is the most popular one, as it has many pros compared to other methods, including:
A possibility to control opening and closing of each order.
Clear control over the change of the market situation.
Quick reaction to release of fundamental news.
Flexible approach to setting Stop Loss and Take Profit orders.
A possibility of trading regardless of the market situation.
It is also worth noting that manual trading also has cons, the main ones being the following:
It is not possible to trade more than 4-6 currency pairs simultaneously. The quality of trading falls substantially if their number is bigger.
It is impossible to send many orders for purchase/sale of different currency pairs within a short period of time.
Complex calculations take time.
It is impossible to review several charts simultaneously.
The trading time is limited to the time a trader can dedicate to being on the trading platform. Accumulation of physical fatigue.
High psychological strain on the trader, which results in mistakes leading to losses.
Automated trading
Automated trading means using a special software (Expert Advisor), which automates the process of performing trades, thus substantially saving the time and effort of the traders.
A trader creates a trading algorithm based on his/her trading strategy and sets the advisor up accordingly. After that, the traders are performed without the trader’s involvement, i.e. automatically.
The advisor strictly follows the criteria chosen by the trader: conditions for entering and existing the position, no-loss level, admissible risk and other indicators. The trader only has to monitor the efficiency of his/her strategy and make adjustments, if and when necessary.
The pros of automated trading include:
A possibility to work with a large number of instruments.
A possibility to place many orders for purchase and sale simultaneously.
Instant reaction to price fluctuations.
The advisor does not feel any emotions: fear, panic, unfounded euphoria.
Instant analysis of indicators, charts, volumes.
A possibility of 24h trading.
At the same time, automated trading also has a large number of cons, the main ones being:
If the strategy was chosen incorrectly or there were mistakes in setting up, the advisor will not stop performing trades, even if they lead to losses.
Simple advisors cannot perform fundamental analysis and react to the news.
An advisor cannot independently adjust to the changed market conditions, which means its settings must be adjusted continuously.
An advisor cannot pass a trade, even if it is based on a false signal, for example a false breakout.
Semi-automated trading
Semi-automated trading means that a trader makes an independent decision on opening or closing a position, same as with manual trading. At that, complex calculations, analysis of charts and indicators are performed by the expert advisor, which provides the trader with corresponding signals for opening or closing the trades. In semi-automated trading, the advisors often play the role of a confirming indicator, when fundamental factors point to opening a trade, and the signal from the advisor serves as a confirming factor.
The pros of semi-automated trading include:
Instant analysis of price fluctuations, indicators, volumes.
Simultaneous formation of signals for purchase/sale of several currency pairs.
Providing the trader with an opportunity to take fundamental factors into consideration without performing automated trades.
The cons of the semi-automated trading are similar to those of the manual trading, the main ones being:
Opening trades manually, which leads to delays with opening orders.
Impossibility to open/close trades for a large number of trading instruments.
In case of a mistake in the settings, a semi-automated advisor will provide wrong signals for opening/closing trades.
The number of trades is limited to the time a trader can dedicate to being on the trading platform. It is impossible to trade 24/7.
Emotional condition of the trader may affect opening/closing of the trades.
Appearance of false signals for opening/closing trades due to short-term price changes.
Note:
Traders Union experts do not recommend using the advisors with closed (non-adjustable, not fully adjustable) parameters based on a trading strategy that is unknown to the trader, or the advisors that use indicators that are unknown to the trader. Such expert advisors can often be found online and are sold or offered for free on specialized websites.
To answer the question of which trading method the majority of successful traders use the most, the team of TU analysts surveyed 2,800 traders – members of the TU community. The survey was conducted using the CAWI (Computer Assisted Web Interviewing) method. The non-sampling error of the survey with a confidence level of 95% is no more than 2.2%.
Successful traders from different countries were offered to fill out a structured questionnaire, sent to them via email. All respondents have shown profitable trading for at least one year.
6.1. Surveyed traders by gender:
77% men;
23% women.
Picture 6.1. Respondents by gender, %
6.2. There are the following age groups in the sample:
45% of the respondents are aged 18-30;
34% — aged 30-45;
17% — aged 45-60;
4% of the respondents are older than 60.
Picture 6.2. Respondents by age, %
6.3. In terms of their trading experience, the composition of the respondents was as follows:
3% of the respondents have been trading on Forex for over 10 years;
24% — more than 5 years;
43% — from 3 to 5 years;
30% — from 1 to 3 years.
Picture 6.3. Respondents by Forex trading experience, %
6.4. In terms of the average monthly deposit growth for the last 12 months the results of the surveyed traders are as follows:
4% of traders — up to 15%;
17% of traders — up to 10%;
29% of traders — up to 5%;
31% of traders — up to 3%;
19% of traders — up to 1%.
Picture 6.4. Average monthly return rate of successful traders, %
6.5. The responses of the respondents regarding their trading strategies were as follows:
47% use long-term strategies;
53% — short-term strategies.
Picture 6.5. The ratio of use of long-term and short-term trading strategies, %
6.6. The answers to the question about the use of Expert Advisors were as follows:
47% of the respondents say they do not use expert advisors for trading;
38% of traders prefer to use EAs;
15% of traders use advisors partially (not regularly or for trading part of their deposit).
| Use of Expert Advisors in trading | Votes | % |
|---|---|---|
No, I don’t use EAs |
1316 |
47% |
I use EAs all the time |
952 |
34% |
I partially use EAs |
532 |
19% |
Total |
2800 |
100% |
Table 6.6. Distribution of traders’ votes on their use of Expert Advisors
Picture 6.6. Distribution of traders’ votes on their use of Expert Advisors, %
6.7. The respondents who “use EAs all the time” or “partially use EAs” were also asked about their trading method with the use of Expert Advisors.
Their answers were as follows:
78% of the traders prefer fully automated EAs;
22% of the traders use semi-automated trading.
| Trading method used with EAs | Votes | % |
|---|---|---|
Automated trading |
1158 |
78% |
Semi-automated trading |
326 |
22% |
Total |
1484 |
100% |
Table 6.7. Distribution of traders’ votes on their preferred trading method with the use of Expert Advisors
Picture 6.7. Preferred trading method with the use of EAs, %
(*) Survey criteria:
Survey audience: successful Forex traders of the TU community aged 18 and older trading with the brokers from the TOP 10 list of TU rating.
The sample is representative in terms of age, gender and Forex trading experience.
Sample number: 2,800 respondents
Survey method: CAWI (Computer Assisted Web Interviewing).
Non-sampling error of the study with a confidence level 0.95: no more than 2.2%.
Period of survey June 24-25, 2023.
Based on the results of the research, the TU analysts have reached the following conclusions:
The majority of traders interviewed by the TU experts prefer manual trading.
The majority of the surveyed traders, who use Expert Advisors, prefer fully automated trading.
Experienced traders choose manual traders more often than other traders.
Traders who prefer short-term strategies choose trading with EAs more often than traders who use long-term strategies.
Traders with the highest average monthly return in the past 12 months, who use EAs for Forex trading, choose semi-automated trading more often than other traders.
For more detailed information on the best Forex trading strategy, download the full version of the research conducted by our team.
Using automated EAs is a good alternative to manual trading, but traders need to keep in mind several factors that strongly impact the level of success of automated trading:
the main rule of using an automated EA is full trust towards the strategy on which it is based.
traders should take into consideration that interference with the trading algorithm while it is in use can often lead to losses.
simple EAs do not take into account fundamental factors (statements by the central bank governors, decisions on key interest rates, unexpected macroeconomic news, etc.), which is why they often cannot react to them adequately and in a timely manner. Experienced traders that use automated EAs recommend turning them off on the eve of the release of serious macroeconomic information.
before using an EA, you need to thoroughly test it in the strategy tester (using a long period) and on a demo or live trading account with minimum lots and leverage.
regularly check all trades, which were opened and closed using an EA, and make corresponding adjustments to its operation, if and when necessary.
Observe the rules listed above and automated trading in the Forex market will bring you stable and high profit.
Antony Robertson
Traders Union’s analyst trader
Background info.
TU research is a result of many days of hard work by our experts, who collected, processed and analyzed a huge amount of information and opinions on the use of Forex Expert Advisors in the Forex market. Our data are also largely based on the success stories of real traders, who work with TU, which confirms their objectivity and impartiality.
Our research is of a charitable nature and was created at the expense of Traders Union with the objective of promoting financial literacy of Internet users and increasing the percentage of successful transactions among traders. If you enjoyed our research and found it useful, please share it with others.
Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.
He firmly believes that passive investing is a more suitable strategy for most individuals. Andrey's conservative approach and focus on risk management resonate with many readers, making him a trusted source of financial information.
Glory is a professional writer for the Traders Union website with over 5 years of experience in creating content in the areas of NFT, Crypto, Metaverse, Blockchain, or Web3 in general. Over the last couple of years, Glory has also traded on different cryptocurrency and NFT platforms including Binance, Coinbase, Opensea, and others.
“I understand a lot about this space, being familiar with CEX, DeFi, and DEX, as well as operating across the Ethereum, Binance, and Polygon networks. Also, I know the intricacies and subtleties of NFTs and crypto, thus I am able to bring to table the best content and help connect with the audience better.”
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.
