Expert Advisors are computer programs or "robots" that automatically place trades on your behalf using complex algorithms. While their success depends on the programmer and the trading criteria that they are programmed to respond to, the fact is some of them have recently proved to be highly profitable.
Aside from the profit potential, some investors are drawn to these trading robots, or EAs because of the difficulty and complexity of learning a market themselves. While there is no substitute for becoming conversant in any market you wish to invest in – be commodities, stocks or foreign currency (Forex) – a good EA may allow an investor to participate without having to master market interests himself.
Expert Advisors make use of technical indicators in order to assess market conditions, make buy / sell decisions and in some cases automatically execute orders. That's right, some EAs are capable of trading automatically for you. You just install them, set or confirm the parameters and leave them running.
One advantage to EAs is obvious: the systems are emotionless and objective (without fear or greed to interfere in the decision making process), operating purely based on mathematical logic. Successful traders of all stripes tend to agree on one point: when trading you MUST leave emotions out of the equation.
Banks and other financial institutions have been using complex algorithms and computer programs to automate trading for many years. Recently though, specialized EAs has become available to the ordinary trader as well. This means that anyone with sufficient capital can now start making profits from trading without actually needing to know very much about the market at all.
Of course, it's never as easy as it sounds.
Even the best EAs lose money at times. Also, as you've no doubt been warned repetely, "past earnings are no indication of future performance." Even though a trading robot has been successful in the past, does not mean that it will continue to be profitable in the future. Market conditions can and do quickly change.
The success or failure of an expert advisor depends entirely on the programmer. But if they program the EA to take positions based on high probability set-ups, then they can make a lot of money for the person who uses it.
Of course there are people who actually like trading and who do not wish to use any kind of trading robot. They appreciate the challenge. Myself, I'll take the profit over the challenge every day.
That said, there is no excuse for not learning a market if you are going to invest in it. You can get a certain amount of training from brokers who may provide charts and market news to clients. In addition, you can check out an online trading forum. Trading communities often share advice and trading strategies and experienced members often make themselves available as resources to turn to for trading advice.
Still, there seem to be dozens of different expert advisers available with more coming online every month. Many of them do the same thing and are usually targeted towards "investors" who clearly do not have a fundamental understanding of the way a market works. The sales copy always promises a "set and forget" way of entering the market for massive profit.
Diligently check them out before entrusting them with your money.
When you do select an Expert Advisor that sees to deliver to other people what you want, double check your expectations. By that I mean if you're looking for an 8% profit each month, keep in mind that what you're after is an average. EAs are not necessarily persistent. Your actual returns will probably fluctuate dramatically, making 10% one month, 60% the next, followed by a 25% draw down the month after that.
That's the basic nature of a market. Be prepared.
Above all, despite all the hyperbole on the sales pages, Expert Advisors are not a tool for getting rich quickly. Nothing is. The people who get that lucky are few and far in between and they are never identified by Lady Luck in advance. Expert advisors are a merely a tool of the trade. They can help you accumulate wealth but like any good plan it will take time.