Automated Forex Trading vs Manual Forex Trading.
Robots vs Humans.
Unless you have been living under the rock, you have probably heard about the constant forex trader’s debate on what style of trading is better.
Well, different traders would give you different opinions. Some prefer manual, while others would die for automated.
But then again, there are people out there that would die for a good selfie…
So which one is really better?
The truth be told, both approaches have their advantages (and disadvantages), and both sides have good arguments to support their stance.
Let’s dig a bit deeper and explore some advantages of both automated and manual trading.
Forex robots (also known as an Expert Advisor, or EA) are a piece of software that trades automatically based on a set of preset conditions.
But it’s not as fancy as it sounds.
When I first heard the term I had visions of an intelligent machine capable of outsmarting my Roomba at a game of Chinese checkers.
But… it’s not.
Let me put that into context for you. If we were to create a basic technical trading strategy using the RSI indicator.
Say, we enter a trade every time RSI oversold or overbought on a particular chart. Everytime RSI hits a particular number we want to buy or sell and set an accompanying take profit and stop loss level.
Instead of sitting watching the charts for hours on end, the software (or your Roomba…. I mean robot) can do it for you.
All you need is some basic MQL5 coding knowledge to get started.
It’s that easy.
These robots/EA’s are also what’s known as black box system. We don’t know how they’re built or why they work. All we can do is attach it to our charts and cross our fingers.
But they do have some advantages…
✔️ They are exact, perfectly disciplined, and don’t make mistakes (if programmed correctly, of course).
✔️They stick to the trading plan you set up. Robots ain’t got no time to rebel.
✔️ Forex robots will ALWAYS execute your trades correctly. A robot won’t take a buy when it should be taking a sell, it won’t enter the wrong lot size.
✔️ Forex robots can take in more data than human traders.
That means, if your strategy applies to a whole bunch of different currency pairs, you can probably only monitor a few at a time. With an automated system, you just plug it into however many charts you want it to monitor and boom, it won’t miss a signal. Another point for the robot…
✔️ Forex robots don’t get tired and can be plugging away at the markets 24 hours a day. That is 3, 4 maybe 10 times as much as a manual trader trades the market.
Okay, Okay. The human trader has been beaten up enough. Time for them to fight back!
Manual trading is when trades are entered by a human without using computerised algorithms or programs.
✔️ The main advantage of humans compared to robots is that we have a brain. Shocking, I know…
Let’s move on.
✔️Robots can only execute trades based on the scenarios that were programmed into them, whilst humans can take into account everything that is going on and process it altogether.
✔️ Humans can take into account fundamentals that are occurring unexpectedly (like Trump being busy on Twitter slamming poor Jinping again).
✔️ Manual forex trading gives you the real feel and thrill of the forex market.
✔️ Supply and demand are influenced by human variables which most computers cannot analyse or predict.
✔️ Humans can see that the market is moving extremely slow or unreasonably erratic and pull out their trades.
✔️ Humans can decide when they have enough profit and when they think the momentum will continue in their favour.
✔️Humans can use qualitative factors to judge the current market scenarios.
✔️ And most importantly, experience, knowledge and intuition will ALWAYS outperform computation logic.
There is a place for automation in your trading. But in all honesty, it only works with manual oversight.
You MUST understand the reason the market is moving and couple this knowledge with a technical overview.
There are NO shortcuts to successful trading.
You need to put in the effort if you expect to succeed. If you have the passion and dedication will eventually succeed and set yourself up for financial independence.