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 prefer to trade the Forex market with an automated trading system, also known as a trading robot.
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 manual and automated trading.
First, let’s take a quick look at what forex robots are and what are the advantages of using an automated trading system.
Forex robots (also known as Expert Advisor, or EA) are a piece of software that trades automatically based on a set of preset conditions. This type is also known as automatic trading or algorithmic trading and is basically a trading method that uses predefined algorithms (usually based on technical analysis indicators) in order to automatically place orders in the markets.
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 and insert it into our trading platform. Say, we enter a trade every time RSI oversold or overbought on a particular chart. Every time 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 a trading robot) can do it for you.
All you need is some basic MQL5 coding knowledge to get started. Moreover, many traders (and especially new traders) use free demo accounts provided by brokers to test their different strategies and achieve consistency before they start live trading.
It’s that easy.
These robots/EA’s are also what’s known as black-box trading systems. We don’t know how they’re built or why they work. All we can do is attach it to our charts, find a statistical edge, and cross our fingers.
But as you can see, automated systems clearly have some advantages…
Trading systems are exact, perfectly disciplined, and don’t make mistakes (if programmed correctly, of course).
Okay, Okay. The human trader has been beaten up enough. Time for them to fight back! So, let’s take a quick look at what manual trading is and what are the advantages of manual trading strategy and human traders.
Manual trading is when trades are entered by a human without using computerized algorithms or programs. It can best be described when a trader opens a trading account and manually places orders based on technical and fundamental analysis.
There is a place for automation in your trading by using automated trading systems. But in all honesty, the use of automated trading systems only works with manual oversight.
You MUST understand the reason the market is moving in a certain direction and couple this knowledge with a technical overview. There are NO shortcuts to successful trading.
You need to put in the effort, develop a disciplined mindset, and set specific rules if you expect to succeed. If you have the passion and dedication you will eventually succeed and set yourself up for financial independence.