What is EA? Complete! From meaning, advantages, to limitations

EA in its original sense - The Automated Assistant for Investors

Confusion begins with technical terminology. When talking about a “investment assistant,” the first image that comes to mind is a broker or an investment advisor who provides recommendations and manages accounts. But that’s old news.

Nowadays, EA (Expert Advisor) is a computer program designed to operate on your behalf in trading on MT4, whether it’s FOREX, currency trading, gold, or oil.

Originally, an investment assistant might become exhausted from too much information, leading to analysis errors and losses. EA addresses this problem by making decisions based on statistics, not emotions or fear.

How does the EA system work?

EA is a set of programmed instructions that collect various market data to analyze price patterns and trends. With modern AI technology, EA can “decide” and execute buy/sell orders automatically, managing profit and loss points without requiring you to be in front of the screen all the time.

It may sound like a dream, but it’s real. On MT4, EA operates 24 hours a day, aligned with the FOREX market, which opens for about 20 hours daily.

Main advantages of EA - Why do investors choose it?

1. No need to be glued to the screen

Products on MT4 have extended trading hours, especially FOREX, which operates almost all day. Constantly watching the screen can lead to fatigue and analysis errors. EA doesn’t get tired; it works all day according to the programmed settings.

2. Decisions are based on data, not emotions

The volume of incoming investment data can be overwhelming. EA is programmed to select only what is important for its system. Decisions are therefore clear and consistent, not influenced by worries or hopes.

3. Accuracy in preventing losses

The most critical component of trading is ending losses as quickly as possible. (Stop Loss) allows EA to exit a trade immediately when the price reaches your specified point. Additionally, EA can manage the (Take Profit) point beautifully by closing orders when profits reach the target set.

Limitations that EA still cannot do - Things to know

1. EA is written for a single asset only

EA designed for FOREX cannot be used to trade gold or oil. Each market has different characteristics and behaviors.

2. EA only executes pre-set instructions

Most programs are set to take profits at 6%. If the market moves more aggressively, say 20%, EA will still close at 6%. You may miss out on additional gains.

3. There is still a risk of “account wipeout”

A wipeout means your invested funds are completely gone, leaving no capital to continue. This can happen if EA misreads data or if the market changes drastically. Even with a Stop Loss system, it’s not guaranteed to avoid all losses.

The best solution - Use EA combined with manual trading

Based on experience, the best advice is to combine EA with manual trading.

Initially, when you are new to investing, EA can help you learn the basics and generate some profits. At the same time, create a small portfolio to trade manually, practicing experience and intuition.

Over time, your knowledge will grow. You will notice EA’s weakness in managing profits above the target. You can compete in this aspect by trading manually. Therefore, the best investment journey is to let EA handle the basics while you learn and develop your skills. Both parts working together will make the system complete.