How Many EAs Do You Need to Make Money on Forex?
- In Search of the Lucrative Graal
- Diversification of the Trading Systems and EAs
- Diversification of the Trading Instruments and Markets
- In Conclusion. What Should I Do?
In Search of the Lucrative Graal
Traders are looking for a universal trading system or a beneficial EA to earn quick and easy money. If the Expert Advisor makes losses, the trader eliminates them and looks for a new one. The cycle repeats.
That is why you have to understand:
There is no profitable Graal!
The EA will not turn you into a millionaire since it is not a magic wand. Educate yourself, and study hard, bro! In this case, you can figure out what is necessary to make a profit in the market.
One robot is not enough for a stable income since each one has its lifespan. The Expert Advisor stops earning because the market is constantly changing and evolving. You cannot find a universal robot that is able to survive all market conditions.
So, several EAs collected in one trading portfolio can be a solution to this problem.
One is as good as none. There is strength in numbers. If one Expert Advisor is defeated, another one (from the robots’ army) takes its place in a battle against this or that market condition. This approach allows you to make a profit in a changing market for a long time.
Diversification of the Trading Systems and EAs
What kind of EAs do we need? To answer this question, we should consider the term “diversification.”
Diversification is the trading process applying various trading systems, functioning in different timeframes, markets, and assets. It minimizes the risks affecting one trading system or Expert Advisor. If a robot brings losses, the other robots’ profits cover them.
How to generate a diversified EA portfolio? You have to put various robots there:
Trend trading robots
A market trend exists 20—30% of the total time. Trend movements generate the most profit. Thus, the portfolio should contain trend trading robots that lose little during abnormal market conditions. It can be EAs based on trend indicators.
An Example of the Alligator Trend Indicator
Flat trading robots
They can be a significant part of the portfolio. However, there should not be a lot of them due to the high risk. These EAs apply aggressive money management methods, such as averaging and martingale. Oscillators form the basis of flat trading robots allowing a trader to profit from market fluctuations.
An Example of the Oscillator Indicator Named Stochastic
Timeframe trading robots
You can diversify your portfolio by time aspect. Different timeframes represent different market conditions. A stable trend can occur in the daily timeframe, and the flat one is in the hourly.
The portfolio stability is violated if all robots function in the same timeframe. The fewer correlated Expert Advisors in the portfolio, the better its stability. That is why it is better to create a portfolio of robots that trade on different timeframes, such as:
- Short-term timeframes: M1, M5, M15
- Mid-term timeframes: M30, H1, H4
- Long-term timeframes: D, W
The portfolio performs more stable trading when EAs trade on various timeframes.
Robots based on different trading principles
A wide range of market analysis approaches existing in a portfolio is a necessity. In this case, trading systems analyze the market from different points of view and diverse aspects. So, trading will not be of the same type. It has a positive effect on profits and risks.
There are several market analysis approaches for creating a trading robot portfolio:
- Fundamental analysis + news trading
- Indicator analysis
- Fractal analysis
- Graphics analysis
- Fibonacci sequences
- Japanese Candlestick analysis
- Price Action patterns
- VSA patterns
- Footprint, cluster analysis, etc.
The more proper market analysis methods, the more stable the EA portfolio.
Diversification of the Trading Instruments and Markets
Global financial markets communicate with each other and exchange money. If there is a lull in some markets, the money goes to other ones. This process is endless.
Trade several global markets simultaneously. This feature will allow a trader to revel in the heaviest movements and stabilize the EA trading portfolio. The rule is simple:
The less correlated EAs trading in different markets and in diverse systems, the better it is.
There can be no trend in one market for a long time. So, if you trade in the foreign exchange market only, it will be challenging to make a profit. That is why you have to generate Forex robots using various instruments.
The portfolio should cover the following markets:
- Foreign exchange market — euro, pound, yen, franc, etc.
- Metal market — gold, silver, etc.
- Oil market — oil, gas, fuel, heating oil, etc.
- Stock market — indices, stocks, etc.
- Cryptocurrency market — Bitcoin, Ethereum, etc.
This approach helps to follow the main global trends and diversify portfolio risks. New trading assets can be added to the portfolio to enter new markets.
So, the profitable EA portfolio is changeable. You should add new instruments to it from time to time.
In Conclusion. What Should I Do?
Is it possible to make money in the market using trading robots? Yes, you can do it!
However, one Expert Advisor can not cope with it because there is no universal beneficial Graal. One body is nobody. The robot is not a panacea. You should constantly develop your EA portfolio and research the trading sphere.
To get a stable income, you need to:
- Develop an EA portfolio.
- Generate Expert Advisors that fade in different trading systems and timeframes.
- Produce robot trading on various markets with diverse assets.
Create the EA portfolio! Trade stably and efficiently! The 4xDev company can help you develop such a portfolio!
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