Trading in the financial markets has become a career and a great part-time income earning for many people.
There is a significant number of people who continue to show interest in learning how forex works, and it is essential to learn the markets-auto trading vs manual trading before immersingyourself in trading fully. Here are a few comparisons between auto and manual trading that might help you identify what strategy would work for you.
● Manual trading involves a trader doing almost all the work by themselves. The trader’s tasks applied to scan the market to decide on where to trade and then place the trade themselves. It, therefore, means the much their decision and output does affect how much they will get in return. Auto trading, on the other hand, involves a trader or programmer putting their manual strategy in code form in a way that when certain events occur, the programmed algorithm will automatically make trades. The automated programmes are developed and optimised slowly as the trader builds their skills.
● Auto trading does not involve emotions in trading. As traders get used to trading and identifying their marketing strategies, they struggle with continuing with a trading strategy when they have already experienced some losses. For manual trading, it might take a long while before sharing a consistent set of trades for their statistical analysis if they follow their emotions to look for a favourable strategy which might not be found by skipping from one method to another.
● Auto trading allows for the diversification of markets by building a portfolio for different systems. Since most traders struggle with being responsible for their losses, it might be difficult for a manual trader to deal and work on other markets simultaneously. Manual trading also involves a lot of time to learn about the market and perform the trade by themselves, which might be exhausting.
● Manual trading gives room for a trader to have some control over their trades. While trading on live money, checking your chart and placing your stop loss to reduce your risk level gives you a sense of control. Since an algorithm entirely does auto trading, you might not have much control over the trades apart from changing and improving the codes.
● The programmed algorithms do not guarantee a consistent outcome in the long run. With the volatility of the market and changes in trends, it is not a guarantee that if the program worked in the past, it would work in the future. Manual trading might remain consistent with continuous market learning and expertise on strategies one can use in different market conditions.
● While manual trading might involve just one person who is the trader, auto trading might involve two or more in that if the trader is not a programmer, they will need to hire one. The maintenance cost of auto trading is, therefore, higher than manual trading in that apart from paying a programmer, future optimisations which will require more coding will incur a cost. Auto trading is viable where a trader is dealing with significant capital.
