Best Practices

Follow these guidelines to create robust, profitable Expert Advisors and avoid common pitfalls.

Strategy Development

Start Simple

Begin with simple strategies using 1-2 indicators. Add complexity only when needed.

  • ✓ RSI oversold/overbought strategy
  • ✓ Simple moving average crossover
  • ✗ 7 indicators with 15 combined signals

Understand Your Indicators

Don't use indicators you don't understand. Learn what each one measures and when it works best.

Avoid Overfitting

Don't optimize your EA to perfectly match historical data - it won't work on new data.

  • Test over long periods (multiple years)
  • Use out-of-sample testing
  • Avoid excessive parameter optimization
  • Prefer robust strategies over hyper-optimized ones

Combine Different Signal Types

Mix indicators from different categories:

  • Trend indicator (MA, MACD) + Momentum (RSI, Stochastic)
  • Volatility (Bollinger Bands) + Trend (Moving Average)

Risk Management

Always Use Stop Loss

Never trade without a stop loss. A single bad trade without stop loss can wipe out your account.

  • ✓ Fixed or trailing stop loss on every trade
  • ✗ No stop loss, relying on signals alone

Risk 1-2% Per Trade

Professional traders typically risk 1-2% of their account per trade. Never more than 5%.

Set Maximum Daily Loss

Protect against catastrophic losses by limiting daily drawdown.

Limit Open Positions

Don't let your EA open unlimited positions. Set a maximum (e.g., 3-5).

Account for Correlation

Trading correlated pairs (EUR/USD and GBP/USD) multiplies your risk. Adjust position sizing accordingly.

Testing

Backtest Thoroughly

  • Test over at least 5-10 years of data
  • Include different market conditions (trending, ranging, volatile)
  • Use "Every tick" modeling for accuracy
  • Account for realistic spreads and slippage

Forward Test

After backtesting, run your EA on a demo account for at least 1 month before going live.

Key Metrics to Evaluate

  • Profit Factor: Should be > 1.5 (ideally > 2.0)
  • Maximum Drawdown: Should be < 20-30%
  • Win Rate: Depends on strategy, but generally > 50%
  • Risk/Reward Ratio: Average win should be > average loss
  • Number of Trades: Need enough trades for statistical significance (> 100)

Out-of-Sample Testing

Reserve a portion of historical data (e.g., last 2 years) for validation after optimization.

Money Management

Use Percentage-Based Sizing

Fixed Risk or Linear Lot Size strategies scale with your account automatically.

Avoid Martingale

Unless you're an expert and have strict safeguards, avoid Martingale and similar progression systems.

Compound Carefully

While compounding grows accounts faster, it also increases risk. Balance growth with stability.

Market Conditions

Know Your Market Type

Strategies that work in trending markets often fail in ranging markets, and vice versa.

  • Trend-following: MA crossovers, breakouts
  • Range-bound: RSI oversold/overbought, Bollinger Bands

Avoid Trading During News

High-impact news events cause erratic price movements. Use News Filter strategy to avoid these periods.

Respect Trading Sessions

Some strategies work better during specific sessions (London, New York). Use Trading Session strategy to control this.

Live Trading

Start Small

Begin with minimum lot sizes when going live, even if backtests were profitable.

Monitor Actively

Don't set and forget. Check your EA regularly, especially during the first weeks.

Keep a Trading Journal

Record performance, unusual events, and lessons learned. Review regularly.

Be Prepared to Stop

If live performance deviates significantly from backtests, stop the EA and investigate.

Common Mistakes to Avoid

Curve Fitting

Optimizing parameters to perfection on historical data. Results won't translate to live trading.

Ignoring Slippage and Spread

Real trading has costs. Account for spreads, slippage, and commissions in backtests.

Over-Leveraging

Using maximum leverage to amplify profits also amplifies losses. Use leverage responsibly.

Revenge Trading

Manually interfering after losses usually makes things worse. Trust your strategy or stop it entirely.

No Diversification

Don't put all capital into one EA or one strategy type. Diversify across strategies and instruments.

Skipping Demo Testing

Going from backtest directly to live account. Always demo test first!

Performance Optimization

Regular Review

Review EA performance monthly. Market conditions change, strategies may need adjustment.

Parameter Adjustment

Occasionally re-optimize parameters based on recent market data, but don't do this too frequently.

Multiple Timeframes

Test your strategy on different timeframes (M15, H1, H4, D1) to find where it performs best.

Multiple Instruments

Some strategies work better on certain pairs. Test across multiple symbols.

Psychological Aspects

Accept Losses

Even the best strategies have losing trades. A 60% win rate means 40% losses - this is normal.

Don't Chase Profits

Stick to your tested strategy. Don't increase lot sizes or remove stop losses after losses.

Patience is Key

Profitable strategies take time to prove themselves. Don't abandon after a few bad trades.

Continuous Learning

  • Study successful trading strategies
  • Learn technical analysis fundamentals
  • Understand market structure and behavior
  • Keep up with economic events affecting your traded pairs
  • Join trading communities to learn from others
Remember: There is no "holy grail" strategy. Success comes from proper risk management, thorough testing, discipline, and continuous improvement.

Final Checklist

Before deploying any EA to live trading:

  • ☐ Backtested over at least 5 years
  • ☐ Profit factor > 1.5
  • ☐ Maximum drawdown < 30%
  • ☐ Forward tested on demo for 1+ month
  • ☐ Stop loss configured on all trades
  • ☐ Money management set to risk ≤ 2% per trade
  • ☐ Maximum daily loss limit in place
  • ☐ Maximum open positions limited
  • ☐ Fully understand the strategy and its logic
  • ☐ Starting with minimum lot sizes

Only proceed to live trading when you can check all these boxes!