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The Best MT4 Forex Broker to run EAs (Expert Advisers)
- What are MT4 and EAs (Expert Advisers)?
- The Best MT4 Brokers to run EAs
- What is EA in the first place?
- How to verify EAs with Strategy Tester?
- How to start running EAs on MT4?
- What is a magic number of EAs?
- What are Pips and Points?
- What is a lot?
- What is slippage?
What are MT4 and EAs (Expert Advisers)?
MT4 is an abbreviation of MetaTrader 4 and is FX trading software developed by MetaQuotes Software of Russia.
On MT4, displaying charts and various orders are common and have many functions.
The feature is that you can easily trade automatically by creating a program (script) called EA.
MT4 as the most popular trading platform is used by many Forex brokers.
EA is an abbreviation of Expert Advisor, which is a program for automatic trading on MT4, and is written in the language MQL like the indicator.
As for EA, many EAs are developed and distributed all over the world.
If you use a back-testing tool called “Strategy Tester”, you can verify the profit and loss of an automatic trading program using past data without actually trading.
In order to optimize profit and loss, there is also a function called “Optimizer” that automatically verifies the combination of various parameters.
An EA provides a service that allows even those who have no knowledge of programs to easily create EA.
For those who are interested in automatic trading but it seems difficult, or you want to make an EA by combining various technical indicators by myself, we recommend you to read through this article.
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The Best MT4 Brokers to run EAs
Before getting into more details about EAs and automated Forex trading programs, we are here to introduce you some of the best MT4 Forex brokers to run your EAs freely.
To run your EAs to the maximum capacity, you must choose a Forex broker which provides you low trading cost, deep liquidity, and has no restrictions in terms of trading strategies on the platform.
Do you already have EAs or planning to run EAs to start trading Forex?
Check out the following 3 best MT4 Forex brokers to run your EAs.
- LMFX
LMFX is a true STP Forex broker which has completely no restrictions on its MT4 platforms. LMFX also provides you with raw spread from 0.0 pips, high leverage up to 1:1000 and various bonus promotions which you can benefit for free. Go to LMFX Official Website to find out more. - XM
First of all, XM is known as the largest MT4 Forex broker in the world and its popularity is constantly growing. XM also offers tight spread and various bonus promotions which support you to earn more. XM’s leverage is also high as 1:888. Go to XM Official Website to find out more. - FXPRIMUS
FXPrimus is known as the safest Forex broker to trade for various reasons. FXPrimus’s honesty and transparency have attracted many loyal traders. FXPrimus also has no restrictions on its MT4 trading platform. Go to FXPRIMUS Official Website to find out more.
There are hundreds of Forex brokers in the world, and we have picked up 3 of them according to our experience and our traders’ opinions.
Are you looking for a broker to trade and run your EAs?
See also the list of Forex brokers in the page below.
What is EA in the first place?
EA is a program for automatic trading that can be started with free trading software “MetaTrader”, and is an abbreviation of Expert Advisor.
Detailed logic such as trading conditions and payment conditions is written in the EA, but if you start this EA with MetaTrader, it will automatically trade and settle according to the built-in logic.
In trading, it is said that emotions intervene and the decision to buy or sell is confused.
However, there is no room for the trader’s feelings to be entered into automatic trading using EA.
The more you buy the programs, the better you can expect it to be, because the mechanical trading is repeated according to the built-in logic.
You don’t have an EA yet?
Then try ZuluTrade‘s Social and Copy trading system.
ZuluTrade allows you to copy professional traders’ orders directly to your account for free, thus you do not need to trade by yourself.
To use ZuluTrade’s Social and copy trading system, you are recommended to open an account with AAAFX, a Forex and CFD broker.
Go to ZuluTrade Official Website
Built your EAs by yourself
In addition, MetaTrader allows you to create this EA yourself.
MetaTrader is equipped with “MQL4”, which is a dedicated editor for creating programs, and if you make full use of this and incorporate your own trading and settlement logic into EA, an automatic trading program will be completed.
Since it is possible to incorporate signals of technical indicators as well as simple trading instructions, it is possible to create a variety of EA.
There are various types of trading software that can be used for automatic trading, but the point that you can create a program by incorporating your own original trading logic, and that is a unique feature of MetaTrader.
MetaTrader is used by many traders all over the world, and there are already many EA made by traders.
Many EA that traders have produced results are also introduced on the Internet.
In some cases, EA that produces excellent results is introduced for a fee, but you can easily obtain EA and use it for trading even if you do not have knowledge of the program.
It can be said that one of the major reasons why MetaTrader is supported is the various merits obtained by making full use of the automatic trading program “EA”.
Merit and Demerit of Automated System Trading (EAs)
What’s the difference between .ex4 and .mq4?
If you create or download the indicator or EA yourself, you will get a file with the extension mq4.
The content of this is just a text file, which can also be opened and edited with a standard text editor.
By installing this on MT4 and starting MT4, MT4 platform will compile mq4 file and make an executable file with extension ex4.
Compiling is the process of converting a program written in human-readable characters into a binary program that a computer can understand and execute.
You can compile by opening the mq4 file from “MetaQuotes Language Editor” and clicking “Compile” on the toolbar, besides when starting MT4.
If the program is misspelled, the compilation will fail with an error.
If the ex4 file is created and the compilation is successful, but the message is displayed during compilation, it is a warning and points out a possible bug in the program.
If there is no problem in operation, there is no problem in leaving the warning as it is.
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How to verify EAs with Strategy Tester?
If you can get EA, it can be a feeling that you want to use it immediately, but it is very dangerous to use it for trading without knowing the behavior of EA.
First, we recommend using Strategy Tester for backtesting.
Backtesting is one of the unique features of MetaTrader.
It is the work of applying EA logic to past price movements and verifying what kind of results can be achieved.
Despite the price movement in the past, if you apply it to the fluctuation of the actual rate, you can roughly judge the power of EA.
First, save the obtained EA in MetaTrader, storing the EA in the “experts” folder in the folder where MetaTrader 4 is installed.
Now when you start MetaTrader, you can use the obtained EA for backtesting.
Next, start MetaTrader and click “Strategy Tester” from “View” on the upper left of the screen to show the tester screen.
There are four pull-down menus, “Expert Advisor”, “Currency Pair”, “Model”, and “Period”, so let’s select and enter the conditions you want to verify.
The accuracy of verification for “Every tick”, “control points”, and “Open price only” that can be selected in “Model” will vary.
“Every tick” is the most accurate verification, but it may take a long time depending on the backtest period and the EA used.
Finally, set the backtest period in “Use size and time”, check “Visual mode” and press “Start” to start the backtest.
At this time, we recommend “Visual mode”, if you check it here, the behavior of trading and settlement will be displayed on the displayed chart and you can visually see what kind of trade it actually makes.
How to perform optimization with “optimize function”?
The “optimize” function is a function that can modify the EA parameters used in MetaTrader to the optimum values.
For example, when optimizing an EA that incorporates the logic of “buy orders when the short-term moving average exceeds the long-term moving average,” when changing the number of long-term days and the number of short-term days, moreover, the optimum combination of days is searched by comparing with the past data.
For example, when modifying the parameters of the moving average line incorporated in EA, the verification will be performed as follows (numbers can be changed freely):
- Verify the number of long-term lines in the range of 12 to 30
- Verify the number of short-term lines in the range of 7-10
In this case, the long-term line from 12 to 30, and the short-term line from 7 to 10 are all combined to display the best trading results.
Finding the optimum parameter with this verification function and changing the numerical value embedded in the logic is called “optimization”.
The actual optimization is done from the tester screen called in the backtest.
Set the EA you want to change in the way of backtesting, check “Optimization” and click “Expert properties”, you can call the EA parameters, so change the number of each parameter.
Check the parameter you want to change and double-click the numbers of “Start”, “Step” and “Stop” to change.
Enter “12” for “Start”, “30” for “Stop”, and “1” for “Stop”.
This will verify all combinations step by step, from 12 to 30.
With fine optimization, you can set parameters that give excellent results for any price movement in the past, but if you optimize too much, it will not correspond to the actual price movement at all.
This is an over-optimization called “curve fitting”.
Optimization is the work of fixing the weak points of EA.
Keep in mind that it doesn’t make any sense to create an EA that perfectly corresponds to the past market.
Even if you make a thorough optimization for a certain currency or period, it will hardly work for other currencies or periods.
Who should use ZuluTrade’s Automated Forex Trading System?
How to read the verification results?
You can verify the test results in the “Results”, “Graph”, and “Report” tabs at the bottom of the tester screen.
The “Results” tab shows all the positions you have traded during the test.
The “Graph” tab shows a graph of how your test results increased or decreased your funds.
The “Report” shows detailed data such as the number of trades made during the test period, profit margin, and the maximum loss incurred in one trade.
The “Graph” tab gives you a good idea of your EA performance.
The EA, which drew a smooth rising graph, made a profit without a big loss.
Also, you should always check “Maximal drawdown”, “Profit factor”, and “Total trades” on the “Report” tab.
There is no point in backtesting without checking at least these three.
It is said that an EA with a maximum drawdown of 20% or more has a high probability of causing a large loss in one trade.
Also, an EA with a profit margin of 1 or less means that you could not increase your assets by trading.
Even in actual trading, it will be difficult to make a profit.
Furthermore, EA, which traded extremely few times, is not suitable for actual trading.
On the other hand, you should be suspicious of EA that has produced too good results.
You should also Backtest with other currency pairs and timeframes.
Please note that it is highly possible that the EA is only apparent, with extreme optimization (curve fitting) applied only to past charts.
Also, the longer the backtest “duration” is, the more accurate the verification will be.
Click “History Center” from “Tool (T)” at the top center of the MetaTrader screen and download the past price movement data to improve the accuracy of verification.
This is also different for each Forex broker, but you can download the historical exchange data displayed for each time frame for various currency pairs in units of several years.
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High Drawdown is High Risk
One of the things to note in backtesting is the maximum drawdown.
Not limited to automatic trading using EA, there will always be a losing trade somewhere in FX.
Even if you can win 9 times in 10 trades, it will be meaningless if that one losing trade is causing a tremendous loss.
For example, if you prepare 10,000 USD of funds for trading and lose -20% in one trade, the funds will be reduced to 8,000 USD.
Even if you can win + 20% in the next trade, the funds will only return up to 9,600 USD.
In this example, it is a minus of only 400 USD, but it is rare for FX traders to know that trades of +20% are rarely successful.
It will take some time to recover the original funds, and it will be even more difficult to recover if a similar drawdown occurs.
Conversely, a 20% drawdown can easily occur with a bad EA.
An EA that has a drawdown of 30% or 40% is out of the question.
There is one more thing to keep in mind is a series of losing trades.
Even if the maximum drawdown is 10%, if it occurs twice in a row, the result is almost the same as a 20% drawdown.
It is wise not to use EA, which has frequent losing trades, for actual trading.
An EA with a maximum drawdown of 20% or higher, you should either avoid using it or change its parameters and test again.
If you want to check it, not only check the number in “Report” but also check how the graph is drawn on the “Graph” tab.
Trades with a large maximum drawdown are extremely dangerous, and you might easily find even consecutive losing trades.
Ideally, you should be able to draw a smooth rising graph in the backtest, but first, check thoroughly the maximum drawdown value and the presence or absence of continuous drawdowns.
Display “Strategy Tester” result on charts
Verification using Strategy Tester of MetaTrader can display the verification result on the chart.
MT4 is possible to visually verify at what point and at what timing the order and settlement were made.
When you start the backtest, please check “Visual mode” and check the behavior of buying and selling.
You can grasp the EA’s habits that are difficult to understand only with numbers.
A blue arrow, a red arrow, and a yellow arrow are displayed on the validated chart.
The blue arrow represents the completion of a buy order.
The red arrow is the closing point of the sell order.
The dotted line extends from both arrows and is connected to the yellow arrow, but this yellow arrow is the point where the settlement was made.
The blue dotted line extending from the blue arrow (buy order) is a profitable trade if it rises to the right.
On the contrary, the dotted line extending from the red arrow (sell order) is a trade with a profit if it goes down to the right.
What you want to check is the point where each arrow occurs, that is, the timing of buying and selling and settlement.
An EA that cannot make a profit often has a bad logic and also has a bad timing for buying and selling and making a profit.
Although it is a price movement that can clearly read the downward trend, there are various drawbacks such as making a meaningless sell order after it has almost fallen or missing the settlement point and holding it without making a profit.
In such a case, try adding the technical indicator logic to the EA or changing the parameter to a more suitable one.
Be sure to check the verification results in order to correct the timing of buying and selling and the timing of settlement.
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Be aware of Price Gaps on weekends
Carrying over on weekends is dangerous because the rate suddenly flies even if a stop is specified.
Forex is usually open 24 hours a day.
However, there are times when trading is not possible.
Forex cannot be traded on Saturday and Sunday, that is, weekends.
Carrying positions over weekends is extremely dangerous when trading in the FX market.
Unless you are a seasoned trader with a well-defined strategy, it’s wise to avoid carrying over weekends.
The reason why it is dangerous to carry over on weekends is that the rate may suddenly jump at the beginning of the week.
The FX chart has a series of open, close, high, and low prices, but when a big economic event occurs on Saturday or Sunday, it starts at a rate extremely higher or lower than the weekend price.
Normally continuous charts also start on Mondays with extreme intervals when the rates fly over the weekend.
This phenomenon is expressed as “the window is open” or “the window was open”, and it can cause the timing of payment to be missed significantly.
Of course, on Mondays when the window is open, most of the time, there are large price movements.
In a recent famous case, the phenomenon of “window” was observed when the subprime problem surfaced.
If you have a large window, the start of the week will be a burst of orders, which results usually in slippage.
It will be difficult to trade as you expected. In addition, even if you place a stop order if the window is too wide, the system of the EA or FX broker can not keep up, and there is a possibility that the orders won’t be executed at the price specified.
If you want to trade steadily with or without EA, we recommend that you always close your position on weekends and avoid carrying over on weekends.
Find out “Deviation” setting on MT4/MT5
How to start running EAs on MT4?
If you have backtested using Strategy Tester of MetaTrader and understand the mechanism of the EA, you can finally start it with MetaTrader.
But even if in this case, it is not recommended to use it for real trading yet.
First, you should try the test trading with a demo account.
One of the great advantages of MetaTrader is that EAs can be used for demo trading.
To test your EAs on demo accounts, launch MetaTrader, click “View” on the upper left of the screen, select “Navigator” and call it on the left side of the screen, and the item “Expert Advisors” will appear.
Click on it to select the EA to use.
Then click the EA to be started on the chart, and drag and drop it on the chart to display the dialog box for setting the EA.
In the “General” tab, check “Allow live trading” and click “OK” to complete the preparation for the trajectory.
You can literally change the parameters of the EA by selecting “Enter parameters” next to the “General” tab, but for optimized EA’s you don’t have to do it first.
If a new improvement occurs in the demo trade, you may change the parameters on this screen.
Drag and drop the EA onto the chart to display the EA name in the upper right corner of the chart screen.
Then a “face” mark or “x” mark will appear next to it.
If the face mark is not smiling, click the “Expert Advisors” button at the top center of the screen to change the display to green.
This will launch the EA completely and the “face” mark will be displayed with a smile.
If “x” is displayed instead of “face”, it is a signal that you have forgotten to check “Allow live trading” when dragging and dropping EA onto the chart.
Drag and drop again, check “Allow live trading”, and click “Expert Advisors” at the top of the screen, then a smile mark will be displayed and the EA will start.
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EAs could work differently on Demo and Live accounts
Even if an EA works well in verification and wins in demo account, it could lose in actual trading in real account.
Even if you get an EA to use with MetaTrader, or create your own EA, it is essential to first perform a backtest using Strategy Tester.
Even if you carefully test the EA like this, when you put it into actual operation, you may get an unexpected accident or be dissatisfied with the behavior of the EA.
Especially if you are a beginner of automatic trading, there is a great deal of psychological anxiety.
It seems that EA often becomes unbelievable for beginners if a losing trade comes first.
In case of an unexpected drawdown, you must immediately stop the EA and deal with it at your discretion, but if it is a losing trade within the expected range, be patient and continue to use the EA.
Interventing discretion without patience is one of the major problems in automated trading.
If you can’t rely on EA, you shouldn’t do automated trading from the beginning.
The verification conducted in the backtest is only verification against past price movements, and the demo trade is a virtual trade using the demo server.
In actual operation, you trade with other traders against real-time market prices, so a large slippage may occur and the FX broker’s server could go down.
Be prepared for the fact that no matter how complete the EA is, a losing trade will always occur.
EAs can malfunction with bad environment
The trouble that is unique to real trading, which is different from the demo trade, is the “malfunction of the EA.”
If you become accustomed to automatic trading using EA in actual operation, you will trade using multiple EA with multiple currency pairs.
In such cases, if the rate fluctuates drastically, the EA may not work.
In the EA, the internal program is executed every time the tick fluctuates.
If more EAs are activated at the same time, the more likely the malfunction due to ticks will occur.
A tick is a line chart that hits one point on the rate each time a market is sold.
In MetaTrader, you can cshow it up by clicking to “View”, “Indicator Display”, “Tick Chart”.
Also, when you place a new order, it is always displayed in the dialog box.
Since this line chart simply plots the rates of successful trades in order, it does not determine the number of minutes or seconds at which points are determined.
Therefore, if many EA are activated at the same time when the rate fluctuates drastically, it may cause a malfunction.
Also, depending on the Forex broker that you opened the account and the currency pair that you trade, the tick may not move at all for a few minutes.
Even if the EA has excellent performance, it is the actual trade that unexpected situations occur depending on the trading environment.
Once you have a good EA, it is important to prepare the trading environment to make it suitable so that the EA can maximize its performance.
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Best Currency pairs for EA’s automated trading
Some currencies are technically effective and others are difficult.
FX price movements reflect the results of trading transactions around the world.
A flood of buy orders from all over the world will increase rates in any currency, and vice versa.
With this in mind, some currency pairs are suitable for automated trading by EA and some are not.
Most EA’s have built-in trading logic that captures the signals of technical indicators.
This means that, for currency pairs with many traders who trade using technical indicators, and for currency pairs with many traders who use automated trading programs, the signals of technical indicators tend to be reflected in the chart.
It can be said that EA using technical indicators is particularly effective, especially for currency pairs where hedge funds which manage large amounts of money through automatic trading.
Many traders are realizing the impression that technical analysis is effective especially on EURUSD, GBPJPY, and USDJPY.
All of these currency pairs are major currencies and the total volume of transactions is very high.
On the contrary, most traders participate in discretionary trading in currencies with unstable economic conditions and low total trading volume.
Because the currencies of countries with unstable economic conditions tend to fluctuate in rates and the total volume of transactions is small, a small amount of trading is greatly reflected in price movements.
As such, it requires momentary judgment at the trader’s discretion.
Based on these conditions, it seems that the currency pair of the major currencies are most suitable for the actual operation using EA.
Best time for EA’s automated trading
There are times when a market price is easy to move, and times when technical analysis is effective.
One of the attractions of FX is that you can participate in trading 24 hours a day on weekdays, but depending on the time of day, there are times when the chart hardly changes and it is not profitable.
On the contrary, there are times when traders in each country actively trade and the chart moves actively.
For example, between 23:30 and 01:30 (GMT+0), the price may show reasonable price movements before and after the bank announces the exchange rate to the customer.
Also, since 05:30 to 09:00 (GMT+0) is the time when the European market opens, this time zone is a time when trading is active, rates move well, and it is easy to make a profit.
After 12:30 (GMT+0), it will be the time when economic indicators will be released in the United States.
This time is also a time when transactions are actively carried out in response to the content of the announcement.
However, when important indicators such as employment statistics are announced, it may show a drastic change that can not be grasped rather than active price movements, so in automatic trading using EA, you should understand the genre and content of the announcement well and trade if it is necessary to face.
The above example is just an example, and there should be other points that show active price movements.
Each trader finds his or her favorite time zone, captures his or her favorite price movement pattern, and connects it to profit.
You are recommended to prepare an EA that suits your time zone and price pattern that you are good at, and make a profit.
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EAs may not be suited for sudden volatility
EAs are recommended to pause when an announcement of important indicators is showing too much price volatility.
We have talked about the fact that currency pairs between major currencies are the most suitable for automated trading using EA, but even for currency pairs between major currencies, the market price will move significantly when important indicators are announced.
This is often too intense and complex for EAs to keep up.
Important indicators are those that are announced by the governments and banks of each country and that have a particularly strong influence on exchange rates.
A well-known indicator is a change in the number of US non-farm payroll employees in the United States, an index called employment statistics, which can be said to have an impact on the world economy.
Many times in the past, the announcement of employment statistics has triggered the Great Depression and the bubble economy, and traders around the world are buying and selling before and after the announcement.
As long as the United States remains the center of the global economy, the importance of employment statistics will remain the same.
If the US employment statistics are announced and the market moves significantly, slippage will occur as a matter of course even for Forex companies with strong execution power.
This situation is not suitable for automated trading using EA when the probability of unpredictable troubles and price movements that cannot be handled by the EA is extremely high.
What is magic number of EAs?
The magic number is an authentication function used to manage the position built with EA when performing automatic trading using EA in MetaTrader.
If you become accustomed to automatic trading using EA with Metatrader, there will be cases where you start multiple EA and trade using multiple currency pairs and time-frames.
Also, if the funds increase steadily, you will want to launch many EA and increase the scale of the trade.
And for risk hedging, there will be situations where multiple EA’s are started using multiple currency pairs and time-frames.
In such cases, setting the magic number in the EA will make them function correctly.
When multiple positions are built, not only the trader but also the EA and MetaTrader cannot distinguish which EA is in which currency pair’s position.
The EA manages the position established by each EA based on the magic number.
For example, when using EA on H1 (1-hour bar) and H4 (4-hour bar) charts of EUR/USD at the same time, each EA closes the position established by the other EA.
As long as you set the magic number firmly, another EA will not interfere with the position built by another EA.
In addition, the EA does not interfere with the positions manually established at the discretion.
We do not recommend an EA that cannot set a magic number because it is dangerous to move it simultaneously with other EA.
There is no problem if you use it alone, but it always causes confusion if you work with other EA at the same time.
In MetaTrader, all closed positions are given a unique ticket number (order number), but in the case of automatic trading using EA, it is recommended to always make a distinction with a magic number.
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What are Pips and Points?
Pips in Forex is the smallest unit that represents the rate of the currency in which you trade.
For example, when trading with a currency pair of the Euro and US Dollar (EUR/USD), 0.1 pips is 1 cent.
In addition to pips, the word point is also used, but basically it has the same meaning as pips.
When trading with the currency pair of the Euro and US Dollar (EUR/USD), 1 point is 10 cents.
However, the unit of rate represented by 1 pip or 1 point will differ depending on the combination of currency pairs and the FX broker that you opened the account.
Even in the case of the Euro and US Dollar (EUR/USD), it seems that there are some Forex brokers that display the third decimal place or later.
If you do not know how much is the value of 1 pip of the Forex company that you opened the account, trading with MetaTrader will be very confusing.
This is because most of the automatic trading using EA, as well as simple limit orders and stop orders, is based on pips.
When ordering a position such as “put a buy order when the price drops 30 pips from the opening price”, it is absolutely impossible to trade as expected if the unit of pips of the trader and the FX company is different.
Also, MetaTrader itself is customized according to the trading rules of each Forex broker, so keep in mind that you can not place a normal order unless you know the unit of pips.
What is a lot?
A lot is a unit when buying and selling.
One lot is 100,000 currencies, which will be displayed in lots regardless of the trading of any currency pair.
If you trade in EUR/USD, placing a buy order for one lot means placing a buy order for €100,000.
When placing orders for buying and selling with MetaTrader, the maximum lot number and the minimum lot number that can be placed at one time vary depending on the FX broker that opened the account, but recently many brokers accept small orders in 1000 currency units (0.01 lot).
It is important to note that if you make a mistake in the number of lots ordered, it will cause a serious situation.
For example, if you have set the leverage to 1 for the currency pair of Euro and US Dollar (EUR/USD), one lot of am order will have a margin of at least €100,000 (account of at least €100,000 or more).
However, if you set high leverage, for example, if you set leverage to 1:200, you can easily order one lot with a margin of a few hundred dollars.
The upper limit of the trading amount changes depending on the margin balance, and it depends on the Forex broker you opened the account, but if there is a certain amount of funds and high leverage, high-value trading of 1 lot or 10 lots is easy to be realized.
In addition, if you buy and sell large amounts with high leverage, profits will increase, but losses will also expand at the same ratio as leverage.
There have been countless troubles in which the number of lots was wrong and the funds were short-circuited in a blink of an eye.
The mistake of the ordered lot number will directly lead to troubles related to the increase/decrease of funds, so make sure to check the lot number with the precautions.
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What is slippage?
Slippage is a phenomenon in which the buy and sell orders are not filled at the given rates and the rates shift up or down for some reason.
You always have to take your slippage into account when placing your order.
For example, if you place an order “Buy when the price drops to 85 cents per dollar”, it means that the order will not necessarily be filled at exactly 85 cents.
It is possible that the designated 85 cents will not be filled, but 86 cents, 84 cents, etc.
The main causes of slippage are as follows.
- Poor internet connection (slow speed)
- The specifications of the PC are old
- FX company system problem (server, etc.)
- The market moves rapidly due to a flood of orders
Of these cases, problems with the system of FX brokers and sudden changes in the market can not be prevented by the power of traders, so there is no choice but to select the company which have a very strong execution quality or FX broker that has declared that slippage does not occur.
However, forex is traded in markets around the world, so it’s no wonder that rates fluctuate many times within just one second.
So, in a sense, slippage is obligatory.
In addition, it does not necessarily mean that you lose, but as a result of slippage, you may be able to buy and sell at a favorable rate.
In general, it seems that many Forex companies have adopted a system that allows the trader to specify the width of the slippage that can be accepted when trading.
This is a system that traders can limit risks in advance, so they want to actively use it.
For example, you can add conditions such as “If slippage is within 3 pips, buy and sell, if slippage is more than 3 pips, cancel the order”, and it is customized to give instructions to MetaTrader.
You can also incorporate a program that specifies the slippage tolerance range in advance in the EA used in MetaTrader.
However, there are various differences in the handling of slippage depending on the Forex broker, you may want to confirm carefully before opening an account.
