The main advantage is speed. These programs are able to scan the market and execute on multiple indicators in seconds. Due to rapid analysis and trade execution, more opportunities can be found at better prices. Even the most sophisticated trading strategies can be executed instantly, without the trader being physically present to monitor the charts. Such systems could be advantageous for the decentralised forex market, which operates 24 hours a day, 5 days a week. Traders obtain a huge amount of flexibility. The dramatic reduction in time spent on monitoring the markets reduces transaction costs, due to the saved opportunity-cost.
Suppose a trader wants to monitor whether a price breakout will occur in the GBP/USD pair, using the 20-day Simple Moving Average (SMA) indicator. An EA will constantly monitor this pair and notify the trader, when the price breaks out of the 20-SMA line. Or else, it could be programmed to enter a position (say, 1% of the available balance) instantly when that happens. The complexity of the EA is totally up to the trader.
Another benefit could be that of accuracy. Traders can avoid the pitfalls of manual errors. With manual entries, it is possible that a trader could enter with a wrong currency pair or mention a higher or lower amount.
It is not only human error that EAs can prevent. These programs can also eliminate human bias. EAs carry out activities, based on the trader’s instructions, irrespective of the situation. This can help avoid emotions like fear or greed taking hold and leading traders to ignore obvious trading signals.
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