Lessons
What is a trading bot?
A trading bot (on MetaTrader it is called an Expert Advisor, or EA) is a program that places and manages trades by following rules you can see and set. It does not predict the future. It repeats a plan without getting tired, scared or greedy. A bad plan automated is still a bad plan, which is why we show you how each bot works and encourage testing.
Always start on a demo account
A demo account trades with virtual money on real prices. Run any bot there for at least two to four weeks. You are checking three things: does it install and run correctly, does it behave the way the description says, and can you stomach its worst losing streak. Only move to a live account with money you can afford to lose.
Risk per trade and lot size
Decide the most you will lose on one trade, commonly 0.5 to 1 percent of your balance. Lot size follows from that number and your stop-loss distance. Our lot size calculator on the Tools page does the maths for gold. Bigger lots do not make a bot better. They only make wins and losses bigger.
Drawdown: the number that matters
Drawdown is how far your account falls from its peak. A 50 percent loss needs a 100 percent gain to recover. Check the maximum drawdown in any backtest and ask yourself whether you could watch your account fall that far without switching the bot off. If not, use smaller lots.
How to read a backtest
Look past the profit number. Check the test period, the number of trades, maximum drawdown, profit factor, and whether spread and slippage were realistic. A short test with few trades proves little. Be wary of any curve that is perfectly smooth, and remember that past results do not guarantee future results.
Grid and recovery bots explained
Grid and recovery bots add more positions as price moves against them, hoping for a reversal. They win often and can lose big in a strong trend. Many prop firms ban them. Our catalog marks these bots with a higher risk rating so you can choose with open eyes.
Installing an EA on MetaTrader 5
In MT5 choose File, then Open Data Folder, then MQL5, then Experts, and paste the .ex5 file. Restart MT5 or refresh the Navigator panel. Drag the EA onto an XAUUSD chart, tick Allow Algo Trading, and load the .set file if one came with it. Make sure the Algo Trading button in the toolbar is green.
Prop firm basics
A prop firm lets you trade its capital if you pass a challenge: hit a profit target without breaking the daily loss and maximum loss limits. Read the rules for automation, news trading, grids, and holding trades over the weekend before you pay. Use the Prop Firms page to track your limits.
Glossary
- EA (Expert Advisor)
- A trading bot that runs inside MetaTrader.
- XAUUSD
- The symbol for gold priced in US dollars.
- Lot
- The size of a trade. One standard lot of gold is usually 100 ounces.
- Stop loss (SL)
- A price where a losing trade closes automatically.
- Take profit (TP)
- A price where a winning trade closes automatically.
- Drawdown
- The drop from your account's highest point to its lowest point afterward.
- Spread
- The small gap between buy and sell price that is the broker's cost of trading.
- Slippage
- When your trade fills at a different price than you asked for.
- Grid
- A method that places several trades at set distances from each other.
- Martingale
- Increasing trade size after a loss. It can wipe out an account fast.
- Backtest
- Running a bot on past price data to see how it would have behaved.
- Set file (.set)
- A saved list of an EA's settings you can load in one click.
- VPS
- A rented computer that runs your bot around the clock.
- NFP
- Non-Farm Payrolls, a US jobs report that often moves gold sharply.
- Prop firm
- A company that funds traders who pass its evaluation.
- Challenge
- The test a prop firm sets before it gives you a funded account.
- Profit factor
- Total profit divided by total loss. Above 1 means profitable in that test.