MetaTrader 4 is the trading platform of choice for thousands of forex traders because it allows charting, back-testing, the coding of expert advisors and lots more. It’s a true all-in-one package that can be downloaded free from most brokers. Expert Advisors are simply trading systems that use MT4’s own built in programming language and using a MetaTrader 4 Expert Advisor is not so difficult once you know how.
MetaTrader 4 Expert Advisor – Free Examples
The easiest way to set up a MT4 EA is through the MT4 application itself. The first thing to do is to head over to a decent forex broker such as Pepperstone. Pepperstone offers ECN and PAMM accounts with spreads as low as 0.1-1 pips for EURUSD so they are a good one to choose. Once you’ve opened an account you can download the MetaTrader 4 software.
The pdf on Pepperstone will guide you through the rest of the process of installing the software.
Once you have MetaTrader 4 open, you can find many expert advisors pre-loaded onto the system. Look at the navigator panel on the left and you will see several expert advisors pre-loaded such as MACD Sample, Moving Average and OneClickTrading EA.
Right click on one of these EA’s and you have the option to ‘attach to a chart’. This will load the EA onto your chosen market; EURUSD, USDJPY or whatever and will bring up another window where you can adjust the expert advisor’s settings.
Usually, the EA will start working straight away. You can turn it on or off using the two buttons at the top of the MT4 platform. Clicking the button from red to green turns it on and vice versa.
Going into the trade and account history (at the bottom of MT4) will allow you to watch the EA working in the market, entering and exiting trades.
Other Free MT4 Expert Advisors
To try out another free MetaTrader 4 Expert Advisor look to the right of ‘mailbox’ on the bottom panel and you’ll see the ‘experts’ tab. Click into here and you’ll see lots of new expert advisors that have recently been added to the MetaTrader 4 community which you can load up and try. (Remember, it’s always best to know exactly how an expert advisor works and always demo trade it first).
The Free MetaTrader 4 Expert Advisor From FXeeda
Another place to get a free MT4 expert advisor is from the guys at FXeeda.com. At the moment, FXeeda are offering their EA completely free of charge. To get hold of it you just need to go to the scripts page, copy the script and then paste it into MetaEditor in MT4 using the expert advisor wizard. This will save the EA onto your system which you can then activate in the same way as mentioned above.
Other Free Expert Advisors
Probably the best place to find more free EA’s is in the MetaTrader community itself. There’s plenty of EA’s floating around there and lots of knowledgeable traders who will help you put them together. Trading System Forex is another place to go and provides a list of free EA’s such as the MasterMind 3 EA, the RSI MA Scalper, The Channel Scalper and lots more…
Once you have got an EA you can begin trading it on live markets and see how it does. Crucially, you can also try back-testing it on past data and start writing your own EA’s. When you have your own EA you can even earn money from it by offering it to people to follow on ZuluTrade. There are so many possibilities out there.
Predicting the direction of forex markets, particularly on a short term basis, is no easy task. For longer durations, however, it is a good idea to see a list of economic indicators as these show the fundamental reasons why currencies move. Technical indicators work too, but they are best combined with the fundamentals.
Below is a table that shows some of the world’s leading economies and their respective economic indicators. For trading forex, you should be particularly interested in four things: growth, interest rates, inflation and the current account balance. Once these factors are analysed, it is then a good idea to look at other measures such as the technical outlook or the Commitment of Traders report. This list of economic indicators also indicates the unemployment rate and debt as a percentage of GDP.
List of economic indicators
Data as of 23 Dec 2013
Typically, growth or output of a country is measured by GDP (gross domestic product). Higher GDP generally translates to a stronger currency since the rise in economic growth in a country usually means a higher demand for its currency.
Countries with higher interest rates will usually see their currencies appreciate while those with lower interest rates will see their currencies fall. This is partly due to the carry trade – where investors borrow money in a low yielding currency (such as the Japanese yen) and park it in a higher yielding currency (such as the Australian dollar).
Inflation is another big factor in forex markets. High inflation in a country means that its products are more expensive compared to elsewhere. This leads to less demand for its products and therefore less demand for its currency. The reverse is true for low inflation. High inflation invites higher interest rates from central banks as they seek to control it. Thus, high inflation can result in a stronger currency in the short term but a weaker one in the long term. Again, the reverse is the case for low inflation.
Current account balance
A current account deficit occurs when a country imports more than it exports while a surplus occurs when it exports more. While there are other influences, such as if the imports are mostly financial transactions, as a general rule, countries with current account deficits will see their currency depreciate over time while those with current account surpluses will see their currency appreciate.
Current account deficit’s more than -5% are often considered to be unsustainable and are a sign of potential turmoil. Many currency crises have started when a country’s account deficit grows larger than -5%.
For a full up to date list of economic indicators take a look at Trading Economics and see how many countries have a deficit more than -5%. These countries should definitely be avoided – I will be looking at these in a future article.
Forex trading profits for the week: 43.8 pips
This week only two trades were placed and both were winners yielding a total return of 43.8 pips. All trades were updated live on my twitter account.
Thursday’s trade was a short position in USDCAD and yielded 20 pips of forex trading profits.
USDCAD was trending nicely downwards on the 4 hourly chart and offered a good opportunity to short as the market opened just below it’s key pivot level. A profit target was placed just higher than the second support.
Fortunately the target was hit before USDCAD reversed and went sharply higher. The move was caused as US retail sales came out better than expected, hinting that the Federal Reserve may be forced to withdraw monetary easing sooner than expected. This caused traders to move back into the US dollar since a withdrawal of stimulus is deflationary and therefore bearish for the nation’s currency.
USDCAD forex trading profits: 20 pips
EURGBP was showing a nice smooth trend on the 4 hour chart and the market had pulled back enough to allow a nice opportunity to join the upward trend. The market also showed an upward trend on the longer term charts.
A long position was initiated close to the pivot shortly after the market opened and was held for a duration of around 10 hours until the target was hit.
The target was placed at 0.8438, just higher than the first resistance and returned 23.8 pips. This was another good example of forex markets playing nicely to the technical levels, particularly pivot points.
Little news flow on the calendar meant that EURGBP had a relatively smooth trading day.
EURGBP forex trading profits: 23.8 pips
The COT report or commitment of traders report is provided by the Commodity Futures Trading Commission (CFTC) and is an excellent tool for forex and commodity traders to analyse what other participants are doing in the market.
The COT report is published using data from Chicago and New York futures exchanges every Friday at 14.30 EST and is split between three groups; Commercial traders (typically hedgers), non-commercial traders (such as hedge funds and speculators) and non-reportable traders (such as retail traders).
Why use the COT report?
The COT report provides a way to see what the big players are doing in each market. By doing so, we can find extremes in open position data and identify possible reversal points.
For example, let’s say that the COT report shows the majority of traders in a market are holding long positions. If the majority of traders are already long and the market has gone up, it’s unlikely that there are many bulls left. That means when short traders enter the market it’s likely to drop.
Commercial vs Non-commercial
Another way to spot reversals using the COT report is to watch when positions data between the commercial traders and non-commercial traders diverge.
Commercial traders are typically big market players that use the market to hedge. A big gold company for example will enter the market to hedge their business exposure against gold. While non-commercial players such as hedge funds will buy or sell outright positions looking to profit from directional moves.
Commercial traders tend to trade differently to non-commercial traders. They usually become more bearish at market tops and bullish near market bottoms. Non-commercial traders on the other hand like to buy into trends. They are therefore shown to be at their most bullish as the market peaks and most bearish when the market hits at bottom.
At times when commercial traders are predominantly long and non-commercial traders massively short, or vice versa, there is strong divergence, an indication that it is probably a good time to buy or sell the market.
Finding the COT report
You can find the COT report by going to the CFTC website and downloading it every Friday. Or, you could jump over to forex broker Oanda, which provides a couple of different tools to measure open position data, including data from the CFTC and their own customers positions.
Take a look at the below tool from Oanda and you can find where traders are predominantly short or long any of the main forex pairs or gold. Notice how when non commercial traders move to one side of the trade, the market often turns around and goes the other way.
Using the COT report is not a foolproof strategy but combined with other analysis can help you make some good money in the forex markets.
Edit: I don’t know why but sometimes the below tool fails to load. If that is the case head over to oanda.com and you can find it there.