Lastly, in this Introductory Guide, I’m going to discuss some of the tools, services & resources that are available to you and will help you take your trading to the next level. Knowledge is power these resources help to ensure that you are geared-up to improve your success with Forex trading. I strongly suggest that you take full advantage of every possible resource to get you ahead of the crowd and help you take full control of your trading. Making careful, conscious & informed decisions are what turns your Forex trading from risky gambling into a safe, profitable investment. These resources are some of the things that will assist you in achieving that!
So let’s have a look at some of the things that I consider to be essential parts of my trading strategy:
1. Virtual Private Server
To ensure that your Expert Advisor (EA) is active and online, you need a dedicated computer with a live internet connection. If you don’t have a dedicated trading desk at home or work I would strongly suggest that you look into subscribing to a Forex VPS service.
What is a VPS?
A Virtual Private Server is a dedicated server that runs in a virtual environment on a powerful machine that can host hundreds of these “Virtual Servers”. Each person that uses the service get’s their own personal “server” that is permanently connected to the internet and “always on”. Remember that your EAs need constant access to the internet when they trade and I would highly recommend you subscribe to such a service or alternatively choose a Broker that gives you VPS access for free, as discussed in my previous article in this Introductory Guide (Step #4: Brokers Reviewed).
Some of the benefits of a VPS:
Each MetaTrader 4 instance you run uses a certain amount of memory. If you get a VPS that gives you, say, 512MB (MegaBytes) memory you can run as many as 15 MT4 platforms! A warning though: Some EAs require more memory and you should check your memory usage by opening Windows Task Manager and monitor how much memory you have available when they are all running. If there’s less than 100MB available, you should be careful because you might run out of memory and your MT4 might crash! Also it’s very important that you don’t do back-tests on your VPS. Do that on your own computer at home as the back-testing uses huge amounts of memory. If you only have 1 (maybe 2) MT4 platforms running on your VPS, then you could do back-tests. Always close & re-open MT4 after doing back-testing. That will free up all the memory used for back-testing. I would also recommend that you restart your VPS (or all your MT4 platforms) once a week to free up some memory. If you don’t have a computer at home and need to do back-testing while running several MT4 platforms, you might want to choose a bigger VPS package that gives you more memory. This could become expensive though…
There are various services on the internet that offers you a wide range of options for having your own server. Options include various sizes of storage space, monthly bandwidth (amount of traffic that can transfer to and from your server), Memory (RAM) etc.
Let’s look at two of them that I personally would recommend (Remember you don’t need these if you choose a Broker that offer free VPS services)
ForexVPS
SWVPS
2. MT4Stats
MT4Stats.com is a great free service that allows you to publish your live trading stats from your MT4 platform and show it on a website. After registering at MT4Stats.com, set-up you MetaTrader platform to publish the stats to your MT4Stats service and you can immediately access your stats using an address like: fapturbodemo.mt4stats.com. MT4Stats.com provides you with a full guide on how to do this.
The service also gives you a breakdown of what currency pairs performed the best and what your win/loss ratio is as well as avg. per win / avg. per loss, total wins / total losses, etc. This is great for analysing your EAs’ performance.
3. Advanced Performance Analysis
To be a successful auto-trader you need to constantly monitor your EA performance, especially while still testing it on a demo account. To take your systems analysis to the next level you can use an Excel spreadsheet to calculate the different stats for you automatically. You can then copy & paste your trades from, let’s say, your MT4Stats page to the spreadsheet every day or week and everything gets calculated for you. I have created a spreadsheet that does this for you. You can modify it as you like and add other calculations, etc. This spreadsheet is still very basic and there are lots of things you can add to it. MT4Stats.com gives you a lot more stats tha this spreadsheet, but it might be a good idea to have something like this where you keep a record of your trades & stats offline on your computer. I'll be improving on this basic one and post any additions/changes here for you to download.
After filling in a few fields (Initial account deposit, start date and amount of days traded) you can copy & past your trades into the spreadsheet, and it will calculate the following:
On the bottom tabs (or worksheets), you’ll see 3 worksheets that are named: Trades, Performance Analysis and Projected Income. You paste your trades into the “Trades “ worksheet and the stats get calculated on the other worksheets.
Like my EA settings, this spreadsheet is provided to you free of charge, all I ask is for you to register on my Blog for free at the top of the blog sidebar. Once registered, I will give you access to my new "members-only" blog where you can get the password for the spreadsheet as well as see my strategies & settings for my EAs. Please allow me a few hours to enable access, as I currently have to do this manually. You will receive an email where you have to click on the activation link, which will then take you to the new members' blog. I ask this small favour because I want to get an idea of how many people are actually downloading my resources and requesting my EA settings.
Unfortunately it turns out that my "members-only" blog only allows access to people with Google accounts. If you don't have a Google account, you can still register and then post a request comment at the bottom of the article and I will email you your requested password/strategies/settings/etc. In the next month-or-so I will have a new members website, that will ensure a much better experience for you.
System Expectation is very valuable to know. It tells you that for each dollar you invest, you will get x amount of dollars back in a few months. Let’s look at an example: If, after 50 trades, your systems’ Expectation is 0 it means that your EA did not make any money, and also not lose any money, your win/loss ratio is the same… Your account balance will still be the deposit amount. If it’s 0.1 it means you made a slight profit. A good Expectation is around 1.5 to 2, meaning that for every $1 you invest you’ll get an additional $1.5 to $2 back over a few months. An expectation of 1 means 100% profit. If your system’s Expectation is less than 1 after 50 trades, change your strategy, broker or consider getting a refund and go for another EA. If it’s more than that, great stuff, keep your EA! My current Expectation on my FapTurbo account (after 84 trades) is 1.82
Expectation can be calculated by using the following formula:
Expectation = (% Win X AvgWin) - (% Loss X AvgLoss)
Where:
4. Forex Calendar
For some EAs, especially FapTurbo, it might be a good idea to disable your EA over public holidays. You only need to switch it off on the currency pairs that might be affected by the holiday. For example, if there is a holiday on a certain day in the USA, switch your EA off on the specific chart(s) where one of the currencies in the pair is USD.
To switch off your EA for a specific chart only: Right click on the chart, point to “Expert Advisors” and click on “Properties”. On the pop-up window that opens, click on the “Common” tab at the top and un-check “Allow Live Trading”. The next day you can enable it again by checking the “Allow Live Trading” setting.
By doing this you might miss potential wins but also avoid potential big losses. The benefit of avoiding these losses far outweighs the possibility of getting a winning trade.
A good source for getting International holiday dates is: FXStreet Economic Calendar. * Please note that when you open this page, you might see an ad that completely hides the pages you're trying to see, just close the ad by clicking on the "X" at the top-right hand side of the ad frame. You should then see the Bank Holidays page.
* The same strategy can be applied to large news events, especially at the end of each month. When you become more of an advanced trader and have enough time, you can regularly check the Forex Calendar to see when there will be large news announcements and also switch your EA off on these days. Forex MegaDroid, for example, is configured to automatically not place any trades at the end of the month for this specific reason.
5. Trading Psychology
This is one of the most important parts to becoming a successful auto-trader. The right mindset will help you achieve anything!
I had a couple of big losing trades recently and I thought it would be fitting to write a short piece about it... Some losers were caused by me fiddling around and some by my EA & market conditions. Given that I'm only on Demo accounts you can say that I should ignore the losing trades where I fiddled because I won't do that on a live account, but if you are realistic about it, it could happen in a live (real money) scenario. We are human beings and will always make mistakes here and there.
Having said that, there will always be large losing trades from time to time. If it happens to you early-on it when you’re just getting started, it might scare you, where if it happens after you have built up your portfolio for several months, it might just be a little blip on the screen. Either way you need to accept the fact that there will be the occasional "big losers". Fortunately with systems like FapTurbo, Forex MegaDroid & IvyBot (and many others), your account balance will be restored in no time and you're on your way to generate more profit. The winning trades will, over time, always come up top and ensure that you have constant growth on your account.
If we take a scenario where we estimate that there will be 1 big loser every month and a certain amount of winning trades every month, we come up with an average amount of profit per month. If we are very conservative we could say that our EA will make an average profit of about 10% per month. Less conservative trading strategies could give us up to 100% profit on average a month (you need a large account balance for this though...). But in the end even if you get an average of 5% profit a month it is still a much better investment than about any other investment I can think of!
I think the key point here is not to get greedy and to build up your portfolio slowly, starting with very conservative risk (maybe 0.1 - 0.5% of your account size per transaction) and working your way up over several months as you become more comfortable with your EA and your account size grows to larger sizes. I would recommend that you never risk more than 5% of your account balance per trade though. Going higher than this is playing with fire and could cause you to become more and more greedy. Obviously if your EA has proven itself over - let’s say - a year, you can go higher if you are sure of what you’re doing.
I have learned that even the best auto-traders get big losses on their accounts but they understand that it's all part of the game and if you're patient enough you'll be amazed at your profits in a few years (or even several months).
I want to mention here that there are ways to minimise the large losing trades on your live, real money, account by studying the news and announcement dates and holidays. When you get accustomed to this you will know when to switch your EA off on the days that the markets will be influenced in ways that will affect your EAs' performance negatively. I have not yet acquired this research skill but when I go live with real cash I will surely do this because it will be my money and I'll be much more careful with it.
Because it's almost impossible to stop large losses from happening at all, it's important to make peace with the fact that it will happen. Don't get frustrated or angry and lose confidence, you need to keep going. As long as, over time, your overall EA performance is good, make peace with the losing trades and don't have sleepless nights over them :))
Conclusion
I hope this guide provided you with a good, solid base-level to start from. Nothing will be more satisfying than hearing that this guide provided enough information to eventually turn you into a successful auto-trader!
So let’s have a look at some of the things that I consider to be essential parts of my trading strategy:
1. Virtual Private Server
To ensure that your Expert Advisor (EA) is active and online, you need a dedicated computer with a live internet connection. If you don’t have a dedicated trading desk at home or work I would strongly suggest that you look into subscribing to a Forex VPS service.
What is a VPS?
A Virtual Private Server is a dedicated server that runs in a virtual environment on a powerful machine that can host hundreds of these “Virtual Servers”. Each person that uses the service get’s their own personal “server” that is permanently connected to the internet and “always on”. Remember that your EAs need constant access to the internet when they trade and I would highly recommend you subscribe to such a service or alternatively choose a Broker that gives you VPS access for free, as discussed in my previous article in this Introductory Guide (Step #4: Brokers Reviewed).
Some of the benefits of a VPS:
- Live 24/7, 365 days a year so you don’t need to worry about having a computer with a live internet connection. Your EA is live all the time to allow it to monitor the markets and trade when the time is right.
- Have a fast internet connection, so if you run multiple MT4 platforms, all your EAs can trade and they won’t clog up your internet connection and “block” each other from trading because of a slow connection. Also you don’t need to worry about it using up all your bandwidth if you have a monthly limit (Cap) on the amount of traffic transferred on your internet connection.
- You can easily access your VPS from anywhere in the world using Windows (Remote Desktop), Apple Mac or Linux. When you login, you see a desktop, not unlike your own computer’s desktop.
- You can transfer files to and from your VPS, usually using a web service like Parallels Power Panel.
- You have full control over what you install on your VPS. I would recommend though to keep your VPS clean and only install Forex software. Also don't do Windows Updates and don't install virus software. The service provider will do updates for you and do a virus scan on a regular basis.
- You can run multiple MT4 platforms and multiple EAs
- When the VPS gets re-booted your MT4 platforms will automatically start up and continue trading! Although the service providers only do maintenance over week-ends when the Forex is down, you might need to restart your server for whatever reason.
- The service provider will do regular security updates, virus scans and also back-up your VPS so that you don’t loose any files/settings in case something goes wrong. If you mistakenly delete files you can ask them to restore the previous days’ backup and you’re good to go!
- Everything is included in an affordable monthly fee and there’s no start-up fee. Installation assistance and free support is also included in the monthly fee.
- *** Make sure that when you subscribe to a VPS Service you get all these benefits!
Each MetaTrader 4 instance you run uses a certain amount of memory. If you get a VPS that gives you, say, 512MB (MegaBytes) memory you can run as many as 15 MT4 platforms! A warning though: Some EAs require more memory and you should check your memory usage by opening Windows Task Manager and monitor how much memory you have available when they are all running. If there’s less than 100MB available, you should be careful because you might run out of memory and your MT4 might crash! Also it’s very important that you don’t do back-tests on your VPS. Do that on your own computer at home as the back-testing uses huge amounts of memory. If you only have 1 (maybe 2) MT4 platforms running on your VPS, then you could do back-tests. Always close & re-open MT4 after doing back-testing. That will free up all the memory used for back-testing. I would also recommend that you restart your VPS (or all your MT4 platforms) once a week to free up some memory. If you don’t have a computer at home and need to do back-testing while running several MT4 platforms, you might want to choose a bigger VPS package that gives you more memory. This could become expensive though…
There are various services on the internet that offers you a wide range of options for having your own server. Options include various sizes of storage space, monthly bandwidth (amount of traffic that can transfer to and from your server), Memory (RAM) etc.
Let’s look at two of them that I personally would recommend (Remember you don’t need these if you choose a Broker that offer free VPS services)
ForexVPS
- At ForexVPS all packages are ready for Forex Trading right out of the box.
- They pre-install MetaTrader 4 but you can install as many additions as you like.
- Each VPS includes full Administrator access via RDP (Remote Desktop) giving you complete control over installation of Forex trading and/or any other programs, configuring websites, etc.
- Their goal is to provide each customer with the most stable platform available allowing you to focus on making trades, and never having to worry about your network, operating system or connectivity.
- All VPS packages come with a control panel (Parallels Power Panel).
- 24/7/365 Support.
- Windows® Server 2003 Edition.
- Packages starting from $35/month.
- *** I use ForexVPS and I currently have 8 MT4 platforms running on their starter package. You can easily run double that amount though because they give you 768MB RAM.
- *** I recently had an incident where I ran a Windows Update on my VPS (At the time I didn't know that I shouldn't do that because the service provider do this for you on a file-system level.) Anyway I screwed-up my whole VPS while there were trades open! Also I had 12 MT4 platforms installed & configured, 8 of them were running at the time and my VPS had to be re-installed! It would have taken me a week to re-install, setup and configure everything again. The friendly folks at ForexVPS worked over-time though and re-installed my VPS and restored my installations and settings in a few hours. I lost some money on the open trades, on demo accounts though (luckily...) The support team at ForexVPS gave me great service! I learned a big lesson though and when I go live with real money I will never screw around with my VPS again, lemme tell you!
SWVPS
- The most cost effective Virtual Private Server solutions available on the internet.
- All Virtuozzo VPS packages come with a control panel option such as Plesk or Parallels Power Panel.
- 24/7 customer service.
- For UK VPS, please visit their UK website or choose UK location during checkout when ordering.
- Orders are setup within 1 - 24 hours depending on configuration and current work-load.
- Superior performance.
- Windows® Server 2003 Edition.
- Packages starting from as low as $7.95/month! (You can only run 1 MT4 platform so I would suggest taking their WVPS-1 package, it gives you 512MB RAM and is only $18/month)
2. MT4Stats
MT4Stats.com is a great free service that allows you to publish your live trading stats from your MT4 platform and show it on a website. After registering at MT4Stats.com, set-up you MetaTrader platform to publish the stats to your MT4Stats service and you can immediately access your stats using an address like: fapturbodemo.mt4stats.com. MT4Stats.com provides you with a full guide on how to do this.
The service also gives you a breakdown of what currency pairs performed the best and what your win/loss ratio is as well as avg. per win / avg. per loss, total wins / total losses, etc. This is great for analysing your EAs’ performance.
3. Advanced Performance Analysis
To be a successful auto-trader you need to constantly monitor your EA performance, especially while still testing it on a demo account. To take your systems analysis to the next level you can use an Excel spreadsheet to calculate the different stats for you automatically. You can then copy & paste your trades from, let’s say, your MT4Stats page to the spreadsheet every day or week and everything gets calculated for you. I have created a spreadsheet that does this for you. You can modify it as you like and add other calculations, etc. This spreadsheet is still very basic and there are lots of things you can add to it. MT4Stats.com gives you a lot more stats tha this spreadsheet, but it might be a good idea to have something like this where you keep a record of your trades & stats offline on your computer. I'll be improving on this basic one and post any additions/changes here for you to download.
After filling in a few fields (Initial account deposit, start date and amount of days traded) you can copy & past your trades into the spreadsheet, and it will calculate the following:
- Non-trading days (To get an idea of how many overall days the system has traded so far compared to non-trading days).
- Total wins in $
- Total losses in $
- Total profit in $
- Total transactions.
- Total number of winning trades.
- Total number of losing trades.
- Avg. amount per winning trade.
- Avg. amount per losing trade.
- Percentage Winning Trades.
- Average % Return-on-investment (ROI) Per Month.
- All-Time % ROI.
- System Performance Expectation.
- Projected income/returns for the next 3 years (broken down per month) according to current performance.
On the bottom tabs (or worksheets), you’ll see 3 worksheets that are named: Trades, Performance Analysis and Projected Income. You paste your trades into the “Trades “ worksheet and the stats get calculated on the other worksheets.
Like my EA settings, this spreadsheet is provided to you free of charge, all I ask is for you to register on my Blog for free at the top of the blog sidebar. Once registered, I will give you access to my new "members-only" blog where you can get the password for the spreadsheet as well as see my strategies & settings for my EAs. Please allow me a few hours to enable access, as I currently have to do this manually. You will receive an email where you have to click on the activation link, which will then take you to the new members' blog. I ask this small favour because I want to get an idea of how many people are actually downloading my resources and requesting my EA settings.
 | Get Trades Analyser Now |
Unfortunately it turns out that my "members-only" blog only allows access to people with Google accounts. If you don't have a Google account, you can still register and then post a request comment at the bottom of the article and I will email you your requested password/strategies/settings/etc. In the next month-or-so I will have a new members website, that will ensure a much better experience for you.
System Expectation is very valuable to know. It tells you that for each dollar you invest, you will get x amount of dollars back in a few months. Let’s look at an example: If, after 50 trades, your systems’ Expectation is 0 it means that your EA did not make any money, and also not lose any money, your win/loss ratio is the same… Your account balance will still be the deposit amount. If it’s 0.1 it means you made a slight profit. A good Expectation is around 1.5 to 2, meaning that for every $1 you invest you’ll get an additional $1.5 to $2 back over a few months. An expectation of 1 means 100% profit. If your system’s Expectation is less than 1 after 50 trades, change your strategy, broker or consider getting a refund and go for another EA. If it’s more than that, great stuff, keep your EA! My current Expectation on my FapTurbo account (after 84 trades) is 1.82
Expectation can be calculated by using the following formula:
Expectation = (% Win X AvgWin) - (% Loss X AvgLoss)
Where:
- % Win = percentage of trades that are winning trades
- % Loss = percentage of trades that are losing trades
- AvgWin = average amount per win
- AvgLoss = average amount per loss
4. Forex Calendar
For some EAs, especially FapTurbo, it might be a good idea to disable your EA over public holidays. You only need to switch it off on the currency pairs that might be affected by the holiday. For example, if there is a holiday on a certain day in the USA, switch your EA off on the specific chart(s) where one of the currencies in the pair is USD.
To switch off your EA for a specific chart only: Right click on the chart, point to “Expert Advisors” and click on “Properties”. On the pop-up window that opens, click on the “Common” tab at the top and un-check “Allow Live Trading”. The next day you can enable it again by checking the “Allow Live Trading” setting.
By doing this you might miss potential wins but also avoid potential big losses. The benefit of avoiding these losses far outweighs the possibility of getting a winning trade.
A good source for getting International holiday dates is: FXStreet Economic Calendar. * Please note that when you open this page, you might see an ad that completely hides the pages you're trying to see, just close the ad by clicking on the "X" at the top-right hand side of the ad frame. You should then see the Bank Holidays page.
* The same strategy can be applied to large news events, especially at the end of each month. When you become more of an advanced trader and have enough time, you can regularly check the Forex Calendar to see when there will be large news announcements and also switch your EA off on these days. Forex MegaDroid, for example, is configured to automatically not place any trades at the end of the month for this specific reason.
5. Trading Psychology
This is one of the most important parts to becoming a successful auto-trader. The right mindset will help you achieve anything!
I had a couple of big losing trades recently and I thought it would be fitting to write a short piece about it... Some losers were caused by me fiddling around and some by my EA & market conditions. Given that I'm only on Demo accounts you can say that I should ignore the losing trades where I fiddled because I won't do that on a live account, but if you are realistic about it, it could happen in a live (real money) scenario. We are human beings and will always make mistakes here and there.
Having said that, there will always be large losing trades from time to time. If it happens to you early-on it when you’re just getting started, it might scare you, where if it happens after you have built up your portfolio for several months, it might just be a little blip on the screen. Either way you need to accept the fact that there will be the occasional "big losers". Fortunately with systems like FapTurbo, Forex MegaDroid & IvyBot (and many others), your account balance will be restored in no time and you're on your way to generate more profit. The winning trades will, over time, always come up top and ensure that you have constant growth on your account.
If we take a scenario where we estimate that there will be 1 big loser every month and a certain amount of winning trades every month, we come up with an average amount of profit per month. If we are very conservative we could say that our EA will make an average profit of about 10% per month. Less conservative trading strategies could give us up to 100% profit on average a month (you need a large account balance for this though...). But in the end even if you get an average of 5% profit a month it is still a much better investment than about any other investment I can think of!
I think the key point here is not to get greedy and to build up your portfolio slowly, starting with very conservative risk (maybe 0.1 - 0.5% of your account size per transaction) and working your way up over several months as you become more comfortable with your EA and your account size grows to larger sizes. I would recommend that you never risk more than 5% of your account balance per trade though. Going higher than this is playing with fire and could cause you to become more and more greedy. Obviously if your EA has proven itself over - let’s say - a year, you can go higher if you are sure of what you’re doing.
I have learned that even the best auto-traders get big losses on their accounts but they understand that it's all part of the game and if you're patient enough you'll be amazed at your profits in a few years (or even several months).
I want to mention here that there are ways to minimise the large losing trades on your live, real money, account by studying the news and announcement dates and holidays. When you get accustomed to this you will know when to switch your EA off on the days that the markets will be influenced in ways that will affect your EAs' performance negatively. I have not yet acquired this research skill but when I go live with real cash I will surely do this because it will be my money and I'll be much more careful with it.
Because it's almost impossible to stop large losses from happening at all, it's important to make peace with the fact that it will happen. Don't get frustrated or angry and lose confidence, you need to keep going. As long as, over time, your overall EA performance is good, make peace with the losing trades and don't have sleepless nights over them :))
Conclusion
I hope this guide provided you with a good, solid base-level to start from. Nothing will be more satisfying than hearing that this guide provided enough information to eventually turn you into a successful auto-trader!
To all your Forex trading success!
Pieter Smit,
Forex Newbie
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