Here we are, the main part of Automated Online Forex Trading System. This is the brain of all components… like the driver of a car. Until this post, we already knew about reliable VPS for traders and how to select a broker for automated trading. I hope you already understood those previous articles, so this main section would be easy to follow.

Ok, I will explain how to choose a good, safe, and profitable Expert Advisor. Before we continue, I think it’s better to know the common terms that is used to read the result of an EA. Below are the terms :

• Initial deposit — the amount of initial deposit;
• Total net profit —financial result of all trades. This parameter represents the difference between "Gross profit" and "Gross loss";
• Gross profit — the sum of all profitable trades in monetary units;
• Gross loss — the sum of all unprofitable trades in monetary units;
• Profit factor — the ratio between the gross profit and the gross loss in per cents. One means that these sums are equal;
• Expected payoff — mathematical expectation of win. This parameter to be calculated statistically represents average profit/loss factor of one trade. It can also be considered as showing the expected profitability/unprofitability of the next trade;
• Absolute drawdown — the largest loss is below initial deposit value;
• Maximal drawdown — the largest loss of the local maximum in the deposit currency and in per cents of the deposit;
• Total trades — total amount of trade positions;
• Short positions (won %) — amount of short positions and the profit percentage thereof;
• Long positions (won %) — amount of long positions and the profit percentage thereof;
• Profit trades (% of total) — the amount of profitable trade positions and their part in the total trades, in per cents;
• Loss trades (% of total) — the amount of unprofitable trade positions and their part in the total trades, in per cents;
• Largest profit trade — the largest profit among all profitable positions;
• Largest loss trade — the largest loss among all unprofitable positions;
• Average profit trade — average profit value within a trade (sum of profits divided into the amount of profitable trades);
• Average loss trade — average loss value within a trade (sum of losses divided into the amount of unprofitable trades);
• Maximum consecutive wins (profit in money) — the longest series of profitable trade positions and sum of their wins;
• Maximum consecutive losses (loss in money) — the longest series of unprofitable trade positions and sum of their losses;
• Maximal consecutive profit (count of wins) — the maximal profit within one series of profitable trades and the corresponding amount of profitable trades;
• Maximal consecutive loss (count of losses) — the maximal loss within one series of unprofitable trades and the corresponding amount of unprofitable trades;
• Average consecutive wins — average amount of profitable positions in consecutive profitable series;
• Average consecutive loss — average amount of unprofitable positions in consecutive unprofitable series.

In case we are checking a result from backtesting process from an EA, it should give high modeling quality usually 90%. It means that the backtesting process is almost same as real trading process. High modeling quality can be only get with tick by tick method of backtesting process.

O.K., let’s continue to next part. Selecting a good and profitable Expert Advisor can be done based on backtest and/or live test result. The higher priority is live result. Meanwhile, backtest is still being a debate by many coders since the result can be different from live result even is done in the same period. But remember, even live results can’t guarantee that EA’s will be profitable in the future because no one can predict the future (lol).

The main factor for selecting EA is it must profitable. If that EA isn’t, why we should choose it (lol). Yes, to check whether EA is profitable enough, we can see the Profit Factor and Profit Trades (% of Total). The bigger these value mean EA is more profitable.

What about selecting a relative safe EA? This can be done by checking the value of profit factor, absolute drawdown, maximal drawdown, maximum consecutive loss (in money and count of losses) and average consecutive loss. The bigger value of absolute DD, maximal DD, and maximum consecutive loss mean that EA is not safe. From my experience as an EA’s coder, I prefer EA’s that has fixed StopLoss (SL) in intial order. Why? Because we know from the beginning how much that we will accept unlikely loss trades.

One more thing, if you use or buy an Expert Advisor, it is better if you know the strategy behind the EA because we can guess the risk factor. For example, when I know an EA is using martingale system, I can guess it is very risky.

Finally, a good EA at least should meet these requirements :

• Has Live Testing Result and High Modeling Quality Backtesting Result
• Lower Value of Absolute DD, Maximal DD, and Maximum Consecutive Loss
• Has Fixed StopLoss (SL)
• A Safe Trading Strategy(s)
• Have Customer Support and Free Update Version
• Money Back Guarantee would be nice

Some people are selling EA’s online but you must be careful when buying their products. Make sure that they can provide you with those criteria above. A good example EA seller is forexeasystems.com. He provides his buyers with backtesting result and live testing result, too. He even provides money back guarantee for people who buy his products.

Let's try to analyze the result from forexeasystems.com

Summary of Testing:

From the backtest result, we can find out that even Griffin EA has higher profit trades (89.10%), it also has higher drawdown (7.11%) compared to Shark EA at same risk (2% per trade). Then we should check out total profit both of them and find out that Shark EA is much better than Griffin EA. In forward test, Shark and Griffin seem profitable enough but I prefer to use Shark EA since it has proven in longer period.

Ok, now I hope you already understand how to start your own automated forex trading system. But please be aware that forex trading is very risky business. As always said in forex broker's website, risk is your own responsibility.