A MetaTrader Expert Advisor (or EA for short) is used for automatic Forex trading so that you can make money, in theory at least, on autopilot. The basic idea is that the expert advisor trades for you by accessing the internet from your computer and operating your currency trading account through your brokers software.
There are many benefits to using a MetaTrader EA (also known as a Forex robot). Firstly, it does not have needs like people do, such as breaks to eat, sleep or be social and therefore since the Forex market is open 24 hours a day, 5.5 days per week, an Expert Advisor will be up and ready to trade all of the available time.
Secondly, a robot does not suffer from fear, panic, stress or other emotions which so often cause new traders to make bad decisions. An Expert Advisor will obey its settings regardless of the situation and will not succumb to pressures that can result in an unnecessary loss.
Thirdly, a MetaTrader Expert Advisor can cover two or more currency pairs at the same time, which means more trading opportunities. Whilst this is possible for traders to do without the use of an Expert Advisor, it can be very difficult, especially for inexperienced traders.
Finally, an Expert Advisor will keep an eye on your interests and will close a trade if things are not progressing properly. In most cases you can set what is called a trailing stop, which moves in line with the price movement like a ratchet. For example, say you set your original stop on a long trade at 20 pips below your entry point, if the price goes up, the stop will move up by the same amount. Thus, once the price goes up by more than 20 pips plus spread, your stop will be above your entry position and you cannot lose on the trade.
The benefits of using an Expert Advisor are varied and for the most part, are great. However, using one does not take away the fact that Forex trading is inherently a risky business and like all computer programs, a MetaTrader Expert Advisor will follow its settings, but it cannot control the market. As the currency market can be very unpredictable, there are no guarantees that you will make money and it is in your best interest not to risk more capital than you can afford.
Furthermore, most EAs require a live and constant connection to the internet all the time in order to trade and they must be able to monitor the prices through your broker account all of the time so that they know when to open and close trades. If your computer is switched off or you lose your internet connection temporarily whilst a trade is open, there is a risk that the trade will not be closed when it should have been. This can be a problem for people with unreliable internet connections, which means that you would have to be available to close some trades manually, defeating the object of an EA if you were looking to rely solely on it for your trading.
If you choose to start trading using an automated Forex robot, look for program developers that offer the option of having the robot hosted on their servers. This is a lot more reliable than most home internet connections and you will still be able to check your trades manually from your PC, making it a great option and highly recommended if you decide to use a MetaTrader EA to assist with your daily trading needs.