Forex EA Glossary

An EA (Expert Advisor) is a program that automatically trades on MT4/MT5. It enters and exits 24/7 by predefined rules, removing the emotion of discretionary trading.

PF is gross profit ÷ gross loss. 1.0 means break-even; the higher it is, the more efficiently profit is generated. It is one of the most important metrics for evaluating an EA.

Max DD is the largest drop of equity from its previous peak (%). It shows how deep a decline you must be able to endure — one of the most important risk metrics.

Win rate is the share of trades closed in profit. But a high win rate does not mean a profitable EA — always read it together with the size of wins vs losses (risk-reward).

Expectancy is the average profit per trade. A positive value means the EA has an edge that compounds the more it trades.

Risk-reward is average win ÷ average loss. It shows how many losses one win covers, and together with win rate it decides profitability.

Recovery factor is net profit ÷ maximum drawdown. It shows how much profit was generated relative to the risk taken (the largest decline).

The Sharpe ratio divides return by its volatility (risk = standard deviation). For the same profit, a smoother equity curve scores higher.

Increasing lot size after each loss (martingale) / adding positions at intervals into a floating loss (grid/averaging). Win rate and PF can look great, but tail risk (account blow-up) is large.

Balance reflects only closed P/L; equity reflects the floating P/L of open positions too — your "true current value". The more floating loss an EA carries, the wider the gap.

A pip is the smallest standard unit of price movement. Expressing P/L in price distance rather than money makes it easier to compare EAs on different pairs or account sizes.

The longest run of losing trades in a row. It is key input for position sizing (risk per trade) and for judging whether you can endure it psychologically.

Choosing an EA by return alone is dangerous. Align period, symbol, risk and trade count, then evaluate across multiple metrics.

A backtest is verification on past data; a forward test is verification in live (real-time) operation. For choosing an EA, forward = live results are the trustworthy ones.

Demo is virtual-money practice; real uses actual funds. Execution conditions, slippage and psychology differ, so an EA's true ability shows in real results.