All traders live in the world of automated trading. Just several years ago, robots were following humans when it came to trading, but now the situation is changed and the trend has reversed with robots leading the way. Thus, there are at least three reasons which prove that traders should avoid expert advisors.
1. Spreads and execution
A lot of brokers offer the possibility to use an expert advisor in the trading process. Common variables are the spreads and the speed of execution.
Every trader knows that spreads differ in volatile markets of it depends on an important economic event, such as Non-Farm Payrolls in the USA is released. If trader's expert advisor is programmed to open or close a trade during the NFP release or after the enter or exit level will be different and results will not match in testing.
Execution also plays an important role. For example, the robot has a stop loss for a long position at eight pips below the current market price and important news is released. Brokers use ECN (Electronic Communication Network) and it is virtually impossible for a broker to fill the order exactly at a desired level. And again, testing results will not match the reality.
2. VPS costs
An expert advisor is a robot which instructed to buy or to sell when it meets specific conditions. Robots are programming easy and anyone with an IT backgrounds should be able to adapt it. Before developing an expert advisor the important moment is a strategy that will pass the test of time. This can be done in two ways: back-testing the strategy in the history center or just paper-trade the strategy for some time to see how it works.
After these two very important steps we have another one is a VPS (Virtual Private Server). It is a real computer in a separate location that is guaranteed that the trading platform will not close during the trading week. Using a VPS is a great possibility to overcome issues related to the trading platform.
3. Expert advisor bugs
Expert advisor and CFDs are somewhat different as they have the power to make decisions that affect a trader's bank balance. If expert advisor has a bug it means that it could make the wrong decision resulting in a loss of money. And in case if the bug is bad the traders will lose a lot of money.
Before using an expert advisor make sure if it is well tested and keep a careful eye on what it is doing. Remember that a good expert advisor will not need to be micro-optimised in order to make a profit. If a robot does not work as expected make its trade sizes to start with and do not keep too much money in your account.