Auto vs. Manual Trading: What’s The Difference?
With the advent of modern forex trading platforms, an increasing number of people are opting for automated signals rather than manual trading. It’s critical to weigh the advantages and disadvantages of automated and manual trading to determine the benefits and drawbacks of each platform and, ultimately, to decide which one to use.
What is manual trading?
Manual trading is simply a forum where a trader decides when to purchase or sell an asset, and once they have made a decision, they place the trade themselves via market or pending orders. Moreover, as a manual trader, you can scan various markets first to find an opportunity before deciding to act. In short, for manual trading, the trader is the one who does most of the trading, meaning their output is only as good as their output.
For instance, an intraday Forex trader may spend their whole morning scanning through a list of various currency pairs so that they could find combinations of technical trading events using indicators and other types of analysis. They may then either place buy or sell orders themselves or develop a watchlist and set alerts to inform them when an asset’s price has reached a price level they would consider selling or buying.
Advantage
As a trader using manual trading, this platform will help you identify what works best for you. Many traders usually suffer from the mindset aspect of trading and losing trades, which is an inevitable part of the business. Once you figure out the method that isn’t working, you will look for an alternative.
What is Automated Trading?
Automated trading is where a pre-programmed algorithm will decide what you will buy and sell based on the instructions written on the code. A trader or programmer may code their manual strategy so that in case specific rules or events occur; the algorithm will take trades automatically.
For example, an intraday forex trader may hire a programmer to change their manual strategy into an automated trading strategy. After several searches have been carried out, they will notice that the conditions are too loose or constructive. After a moment of optimization, the trader will be satisfied with their algorithms and test them using a demo trading account.
Successful automated traders consistently test, optimize and develop their systems gradually. In this situation, the trader doesn’t have to complete the trading process. They can spend most of their time optimizing their trading systems.
Advantage
With automated trading, traders can develop a portfolio of different market conditions allowing for a level of diversification. The algorithms found in automated trading can help you know which trading platforms worked out better historically and those that have not been working well, and you can choose the one that fits you best.
Conclusion
Since we have gathered information on the difference between auto and manual trading, it’s your time as a trader to determine which method works best for you and which way will give you returns.