Using an FX expert advisor can be a great way to make money on autopilot, but only if you set it up in the right way in the beginning. If you get the settings wrong, it can just as easily lose money for you.

The FX expert advisor will no doubt come with default settings. These may work fine but you will need to check them by using a demo account in the beginning. You will also need to set up your own trading plan. This is quite simple but it must be designed uniquely for you.

Here is what you need to include:

1. Position

Your position is the number of lots that you will take on a particular trade. The FX expert advisor default settings will probably assume that you want one lot per trade, but occasionally you will come across software that has a sliding scale of recommended positions according to the strength of signals or depending on which system is being used, if the software operates more than one system. In that case you should take the largest number of lots and use that as your basis for calculating risk.

Risk will vary according to leverage and the size of your lots. So for example if you have a mini account, one lot is probably $10,000. If your leverage is 100 times, you need to put up $10 per trade. If you have $500 in your account, that is 2% of your account per trade. That is about as high as you should go, so if you have less than $500, consider switching to a micro account.

2. Stop loss level

The setting for the stop loss is the main factor determining risk. Theoretically the stop will kick in and close your trade whenever the price goes against you to a preset amount. Occasionally, because of slippage, you will not get that exact price so keep in mind that you may sometimes lose a little more than the amount of the stop.

Generally it is best to use the recommended stop loss level with your FX expert advisor. If you alter this you may find you do not get the expected results because either the stop is triggered too soon and too often or losses are greater than they should be. So if the stop loss is set at a level that would involve you in a risk greater than 2% to 5% per trade, reduce the position size, which may mean switching to a mini account from standard or to micro from mini.

3. Profit level

The software will also exit the market at a predetermined level on a successful trade. Again, the software will come with a default setting which the developers have usually researched and found to be the most effective. You can test this for yourself if you want.

If the software covers several different currency pairs, you may find that the limit order has been set at the same point for all of them, i.e. they will all close at the same number of pips profit.

In this case it could be advantageous to run some back tests, because this suggests that the developers have not optimized for all of the currency pairs that the FX expert advisor can handle.

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