Selecting an EA

January 2, 2008

Forward-testing an Expert Advisor is the easy bit. finding one that’s worth spending your money and time on is much harder. For that reason, i’ve worked out some guidelines which i use in my selection of Expert Advisors prior to purchasing them.

I’ve been a victim of Expert Advisor scammers before, and i strongly believe that the below guidelines will help in seperating the scammers from those who are trustworthy.

The seller of the Expert Advisor must :

Be the creator of the Expert Advisor. he should be responsive to emails and must be able to articulate on the Expert Advisor’s strategy without the need of a purchase.
Have a proper website that lists the kind of after-sales support that he offers. a minimum would be an email address. ‘free upgrades’ are also good, as it’s a sign that the seller is committed in his business, and that he appreciates the fact that Expert Advisors must constantly evolve to stay profitable in an ever-changing market.
Provide a demo version for forward-testing, or have a live demo running where everyone can see the trades or statement (either on a website that’s being updated constantly, or by providing a read-only login ID and password like what i’ve done for my forward-tests). the minimum would be a forward-test statement that spans no lesser than 1 month and no older than 1 week. back-test statements, in my opinion, are worthless.

I believe the above requirements are not unreasonable.

We cannot blame Expert Advisor sellers for not providing the above. we can only blame ourselves for not doing our due diligence before parting with our money.

Wasted money on a non-performing Expert Advisor is forgivable, but losing one’s trading capital by using a bad Expert Advisor is just plain irresponsible.

That’s said, whether an Expert Advisor is good or bad is also, to a certain extent, subjective. 2 investors with the same Expert Advisor, trading the same pair, same settings and timeframe may have very different results.

As i’ve mentioned before on my blog, understanding how an Expert Advisor works is KEY for anyone who intends to auto-trade with it. it’s important to know the strengths and weaknesses of the Expert Advisor. the investor should know when to let the system ride out the storm on a losing trade, and also when to manually interveen to cut the losses short.

Knowing when to disable the Expert Advisor is also very important. leaving open trades over weekends and letting it trade through a major new event are just 2 instances that could make or break an account.

Having good communications with the Expert Advisor creator is also critical, especially when you have doubts and queries on why the Expert Advisor is behaving in a certain way. an online forum where the customers can interact with the creator would be ideal.

I hope the above guidelines have been helpful. if you have any comments or suggestions, please feel free to email me at ck@ckowyong.com

Let the scammers beware!!

CK – Finding the best Forex Expert Advisor out there

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