Many of us have spent the past months or years looking for some decent profitable Expert Advisors. We just ask for a perfect Expert Advisor. An Expert with a little drawdown, a modest profit, and most important a constant output. We want an EA that is consistent with today’s as well as tomorrow’s market conditions.
The perfect EA, as many of you know, is a multi-billion per second calculation machine with the processing power of millions of modern computers, it can take fundamentals, news, everything into account when making a trading decision. The perfect EA is, in fact, a mere human brain :). This neural network type EA can learn from the market and really adapt almost miraculously to ever changing market condition. The question is, can we mimic that in MetaTrader 4?
I think the answer is simple. One EA alone, cannot do it. Even if we assume that the role of fundamentals and news is taken intro price action efficiently based on the efficient market hypothesis it is still not possible for a single EA to work every possible market condition a human brain could, in fact, interact with. Ergo, I think that the only way in which you could profit from Expert Advisor trading would be from building a portfolio.
The key to portfolio theory is simple. Do not put all your eggs in one basket. By having a variety of investment tools, you minimize risk, because the likelihood of all experts not doing their job at exactly the same time is relatively small, given the fact that they cover a wide variety of market conditions.
This, I think, is one of the aspects that people that look for Expert Advisors are missing. The key for an EA to be part of a portfolio is not for it to do perfectly well all the time. In fact, it only has to do extremely well in a narrow set of market conditions. Then we use different experts to cover the other areas and hopefully, we end up with a combination that is profitable all the time, as the likelihood of all instrument being unprofitable is minimal.