Do you know that you can automate your trading by having an expert advisor (EA)? Here, we will explain what is the best EA for forex trading in Malaysia.
Before we can get in depth with the list of the best forex EA in Malaysia, we need to understand what automated trading is (commonly known as algo-trading), and how it works.
What is Algo-Trading?
Imagine you have RM100. You then write a code on a computer program that follows a defined set of instructions. For example, when the price of one stock falls by more than 50% in 24 hour, the program will use 50% of existing funds to buy. Same goes for selling. You set when to sell depending on a specific situation that you have pre-programmed.
All of this will be done remotely and you don’t have to monitor your trading and the computer will do it all for you. Isn’t that amazing?
In practice, this activity will make markets more liquid since there is a lot of buying and selling happening. By algo-trading, investors can remove the “human” element of investing – making decisions based on emotions.
Algo-Trading Versus Copytrading
Probably you’ve heard about copytrading features famous in eToro. If you haven’t, don’t worry. We’ll break it down to you. In essence, both have their own advantages.
What is Copytrading?
One of the most famous copytrading platform is eToro. They allow you to copy other traders and replicate their performance adjusted to your budget. For example, you saw that Lee is making a consistent 20% gains every month and you want to replicate his success. You can opt to “copytrade” his holdings and therefore, automatically buy when he buys and sells when he sells.
Copytrading has similarities and differences with algotrading and both offer a unique approach in passive trading (which means you don’t have to monitor your position constantly).
Similarities
- Both require short time to set up once you had all the required algorithm/platform
- Passive trading
- Eliminates personal decisions that can be influenced by emotions.
Differences between Copy Trading and Algo Trading
| Copy Trading | Algo Trading |
|---|---|
| Copy trading positions from other user or trader | Execute trading positions based on predetermined criteria |
| Requires platform that support copytrading features (eToro) | Requires software that needed to be installed and linked to your trading account |
| Performance dictated by other traders copied | Performance dictated by the software used |
| More social (depends on people) | More technical (depends on code) |
5 Best Platforms To Use EA in Malaysia
Algotrading is commonly used in hedge funds or professional traders, but in the light of the internet and rise of financial technology, it can now be used by normal investors. Isn’t that great? But first, you have to own Expert Advisors.
What are Expert Advisors (EA)? In essence, EA is the program or piece of code that needs to be uploaded into the MetaTrader 4, MetaTrader 5 or cTrader to enable you to automate your trading. So, for you to be able to engage in algotrading, you have to own an account with MT4, MT5 or cTrader features.
How to Get Started?
There are two main ways to get started on algotrading. It is either:
- You create your own code or
- You buy EA program from the market
To get the best in Malaysia for forex trading, you have to be able to try different options. It is suggested that you use different EA and try each one out using minimal cost. Then, you compare the performance of each EA. Stick the one with the most percentage gains and increase your deposit.
Here are the 5 best platforms for Malaysian Forex EA:
Pepperstone
It is undoubtedly the best reviewed and widely used among the professionals and retail traders alike.It is licensed in Australia and offers cTrader, MT4 and MT5 features. Excellent choice for an algotrader. The trading cost is very low with spreads available from 0 pips. However, the starting cost required is a suggested initial investment around RM880 (USD200). If you’re serious on algotrading, Pepperstone is the perfect platform.
IC Markets
This platform is one of most popular among normal traders. With over 500,000 trades per day totalling up to USD15 billion, they eclipse other platforms by a mile! It supports cTrader Algo that enables users to create their own indicators for analysis. In addition, they also contain MT4 and MT5 features which are required for algotrading. It is also one of the cheapest to start with as it doesn’t have any minimum initial deposit, which means you can start from as low as RM50 (preferable amount).
AvaTrade
Also one of the popular platforms in Malaysia. What’s unique about this platform is you can have access to both copytrading and algotrading. So, it really is the most flexible platform that you can choose. DupliTrade and ZuluTrade are the features offered in copytrading. AvaTrade supports MT4 and MT5 which allows you to set up your algotrading. What more can you ask from one platform? However, you have to bear in mind that they require around RM440 (USD100) for initial deposit and the spread on each trade is quite high at 1.3 pips. Overall, it is a balanced platform with interesting features especially in terms of security (AvaProtection).
OctaFX
This platform is available in Malaysia but overall, is widely used in Asian countries such as China, Hong Kong and Indonesia. It allows users to use its MT4 features for algotrading and claims to have lower cost among other platforms when it comes to algotrading. It is a highly reputable broker and has a strong following even though it is not as popular. They currently offer a 50% bonus on every deposit and this deal will likely boost their usage and popularity. The minimum deposit is around RM440 (USD100) and the spread is at 2 pips, which is quite hefty for some.
FBS
One of the most beginner-friendly platforms. For beginners, you can choose up to 4 different accounts to begin with – Cent Account, Standard Account, Zero Spread Account and ECN Account. All of these account types cater to different types of traders. Initial deposit starts with only RM4.40 (USD1) for Cent Account and perfect for testing out different EA. This platform also supports MT4 and MT5 for those interested in flexibility on algotrading program. Overall, FBS offers one of the best features for beginners and allows customization when you have more experience in trading.
Summary
All in all, algotrading offers a unique opportunity in automated trading and shows that usage of technology can be beneficial for traders. Retail or common traders can now have access to EA that is offered on this brokerage platform themselves. The seismic shift in opportunity means that more and more people will start using automated trading compared to active trading. Less time will be allocated to “picking” the trades and more on choosing the best EA that is suited to market conditions.
Advantages in using algotrading allows traders to fully capitalise on their trading strategies and not be subjected to emotions. However, with benefits, comes a downside.
Some of the disadvantages are any problem with the code/program will cause you to execute bad trades followed by losses that could have been avoided. Any technical difficulties such as unable to install file or incompatibility would also cause troubles to the up-and-coming algotrader.
The best strategy often lies in the ability to backtest all your EA programs differently with small amounts and choose the best one. Over time, this can increase your chance of executing good trades.
Are you interested in learning more about algotrading? Do you think this technology can change the landscape of forex trading in Malaysia? Let us know your opinion and sign up to our platform.