What should you look for in a good EA?
Everyone will have their own preferences for which EA they would like to trial and put to use, but there are a few things that you could look out for from the outset.
- Past performance: how has the EA performed in the past? Over what time period is the performance shown? And what level of risk and return has it exhibited?
- What is the maximum drawdown on the EA? This is very important, as you need to determine if higher levels of drawdown suit your risk appetite. Fluctuations of 70-80% of the value of your account could be dangerous and you need to consider what your risk appetite is.
- Cost: if you’re buying an off the shelf EA, it should be within your budget. Just like any investment, no EA can guarantee future performance. While past performance may prove an EA’s reliability, you need to consider how quickly the cost of the EA will be recouped given your account size and the EA’s forecasted trading performance.
- Developer support: are the contact details of the developer or company easily found, and can you find tutorials or guides on how to troubleshoot issues with the EA? It’s important to find this out, as it could prove costly if they don’t work as intended.
- Reviews: does the EA have a very good rating (how many stars it has been given) and are there sufficient, legitimate reviews available to determine whether the EA does in fact perform as described?
- The MQL5 marketplace (for MT4 & MT5 EAs) and the cTrader algos marketplace are most popular among traders , given the platform providers will monitor them for any suspicious behaviour. While you can purchase EAs outside of these marketplaces, it is best to do rigorous research on the EA you intend to buy, and ask for a free trial where possible so you can conduct your own analysis.