This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
An Expert Advisor, often shortened to EA, is a small program that runs inside MetaTrader and places trades for you. The EA reads the price feed, applies a set of rules, and sends the orders to the broker. As long as the platform is open and connected, the EA watches the market and acts on the rules.
What an Expert Advisor is
An Expert Advisor is a program that runs on MetaTrader and places trades automatically according to a set of rules. The EA reads the price feed, applies the rules, and sends the orders to the broker. The trader can attach the EA to a single chart, and the EA runs as long as the platform is open and connected to the broker.
EAs are written in MQL4 or MQL5, the proprietary languages of the MetaTrader platform. The MQL languages support the same trading functions as the platform, and the language includes access to the price feed, the indicator values, and the order management. EAs are sold on the MetaTrader Market, on third-party marketplaces, and through private developers.
Categories of stock trading EAs
The first category is trend-following EAs, which use moving averages, breakout levels, or momentum indicators to detect the trend direction and to enter in the direction of the trend. Trend-following EAs work on stocks with strong directional moves and clear trends, and the EAs tend to have a higher win rate on those instruments.
The second category is mean-reversion EAs, which bet that the price returns to the average after a deviation. The EAs use Bollinger Bands, RSI, or standard deviation to detect the deviation, and the EAs enter against the move. Mean-reversion EAs work on range-bound stocks, and the EAs can suffer in strong trends.
The third category is breakout EAs, which detect a price move out of a range and enter in the direction of the breakout. Breakout EAs use volatility measures and price patterns to detect the range, and the EAs enter when the price breaks the range. Breakout EAs work on stocks with clear support and resistance levels.
What to check before buying an EA
The first check is the backtest, which the vendor should provide. The backtest should cover at least five to ten years of data, and the backtest should include the spread, the commission, and the slippage. The backtest should also show the drawdown, the win rate, and the profit factor. The trader should look for a profit factor above 1.5 and a drawdown below 20 percent.
The second check is the live track record, which is the most reliable measure. The vendor should provide a verified track record from a third-party service like Myfxbook, FxBlue, or MT4Stats. The trader should look for a track record of at least one to two years, and the track record should match the backtest.
The third check is the support, which matters when the EA stops working as expected. The vendor should provide a clear support channel, a response time, and a documented update history. The trader should avoid vendors who do not respond to support questions or who do not update the EA.
How to test an EA on a demo account
The first step is to download the EA from the vendor or from the MetaTrader Market. The EA is delivered as a single file with the .ex4 or .ex5 extension. The trader places the file in the MQL4/Experts or MQL5/Experts folder, and the EA appears in the Navigator panel.
The next step is to open a chart and to drag the EA onto the chart. The EA's settings panel opens, and the trader enters the lot size, the stop-loss, the take-profit, and the other parameters. The trader should start with the default settings, because the vendor has tested the defaults.
The third step is to monitor the EA on a demo account for at least four to eight weeks. The trader should check the trades, the drawdown, and the behaviour during news events. The trader should also check the slippage and the execution speed, and the trader should compare the live results to the backtest.
Common mistakes
A frequent mistake is to buy an EA without a verified track record, because the backtest can be curve-fitted to the historical data. The trader should look for a live track record from a third-party service.
Another mistake is to over-optimize the EA's parameters, which produces a curve-fitted EA that does not work in live trading. The trader should use the default parameters or a small range of parameters, and the trader should avoid parameter combinations that look too good.
A third mistake is to run the EA on a live account before testing on a demo account. The EA may behave differently in live trading, and the trader should test the EA on a demo account for at least four to eight weeks before going live.
Common questions about stock EAs
Do EAs work on stock CFDs? Yes. The EA sees the price feed the same way, and the EA places the orders the same way. The difference is the spread and the commission, which may be different from the forex backtest.
Can I run multiple EAs at the same time? Yes, on different charts or on different symbols. The trader should check the broker's account limitations, and the trader should monitor the total exposure to avoid over-leveraging.
How much does a good EA cost? The price range is wide. Free EAs are available on the MQL5 Market, and the price of paid EAs ranges from $50 to $5,000. The most expensive EAs are not always the best, and the trader should check the track record and the support before paying.
Related resources
Where to start
If you are evaluating Expert Advisors, the most useful first step is to identify the category of EA that matches your trading style, and to shortlist three to five EAs with a verified live track record. Our broker comparison lists the MetaTrader brokers and the available products, which together tell you what the platform looks like before you attach the first EA to a chart.