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The Perfect Forex EA

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In Star Trek Enterprise (Next Generations) Lieutenant Commander DATA was an artificial intelligence, unable to feel emotion and capable of computing complex mathematical equations in milliseconds. DATA got the Ship Enterprise out of some sticky situations over the years.

So would Data have been the “ The Perfect Forex EA”?

EA’s (Expert Advisors) or automated trading systems have been around for years. Some of the biggest banks in the world have tried to crack auto-trading by hiring some of the smartest mathematical minds in the world to design and write complex programs to trade the forex markets automatically with the goal of sitting back, smoking a big cigar and letting the money roll in. They are still trying!

These days a multitude of EA’s continue to be promoted on the internet as guaranteed instant money makers and selling from anywhere between $99 to $2,000. Proponents of EA’s promote their products on the basis of impressive back tested results and the removal of one of the biggest challenges for self-traders…emotion.

I personally have never seen one that has consistently made money and in most cases they just blew up the traders account.

Here lies the problem… markets conditions are constantly changing. It is not relevant how an EA performed under past market conditions when future market conditions are a complete unknown. An EA that operates under a ranging market  implode when makes trend and vice versa.

They can not adapt as their programming does not allow it. As a discretionary trader if i don’t adapt to changing market conditions it’s over.

You can’t code for fundamental data, central bank policy intervention, news or market sentiment.

So lets go back to DATA. With the help of his positronic brain he would have understood that markets are random and ever changing, found trade opportunities when the markets were volatile (moving), adapted his systems and strategies and executed it all with no emotion. DATA would have been a pretty impressive EA.

Later on in the Star Trek series DATA installs an emotion chip to further his growth as an artificial life form. Unfortunately the chip overloads causing him to experience erratic emotions. That’s when his trading would have gone to shite.

If you want to succeed in the forex market start by putting some trust in yourself rather than magic formulas. There is no perfect trader, system or strategy.

You can stack the odds in your favor by recognizing the market environment you are trading in, identifying if the current price action is random (when you sit on the sidelines) or not random (when you trade), finding your own trading approach that suits your personality and doing it all with a rules based approach devoid of emotion.

At best we are making an educated guess as to where a forex pair is more likely to go next. A trade can be right and still lose money. That is the nature of forex trading.

Success comes from constantly learning, adapting and improving. Try telling an EA that! Leaving you with an apt quote from DATA…

“Believing oneself to be perfect (Or an EA) is often the start of a delusional mind”

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