Automated Trading Vs Manual Forex Trading
What is Automated Forex Trading?
Automated trading systems are software that gives traders the ability to set up specific rules for executing their trades automatically. With the help of these algorithms, all forex traders can enable computers to execute and monitor trades by incorporating entry, exit, and money management rules. One of the main benefits of using automated trading is that since trades are placed automatically, it can help to reduce emotions associated with trading. Overall, this approach has assisted in overcoming a number of drawbacks, such as the implementation of complex trading strategies and emotions
What is Manual Forex Trading
As the name states, manual trading is the practice of opening and closing trades in the foreign exchange market after conducting a self-analysis of the market using technical indicators, strategies, and fundamental news. In manual trading, all forex traders have to go through the process of reading charts to predict the direction of the market.
Manual forex traders must rely on their own abilities to remain composed and carry out trades as intended. To avoid mistakes, like buying when they are meant to sell and to ensure that transactions are completed with the proper order types and at the proper prices, manual forex traders must be diligent in their transaction monitoring and must have extensive knowledge of the market.
Which One is Better for You? Automated or Manual Forex Trading?
Automated traders assign work to computerised systems that use processing power and algorithms to carry out trades automatically. As the market is erratic and ever-changing, it’s very difficult to forecast the next significant movement in a currency pair. Thus, automated trading makes it easier for you by increasing profits while lowering exposure to market risk. Also, automated trading has no emotional or psychological impact on your trades. In manual forex trading, traders manually enter transactions into trading systems. This is why there is a possibility that orders will be entered incorrectly or accidentally. Also, there is a high chance that the trades might be affected by emotions. Further, if the error is significant, the results could be disastrous and the trader may end up blowing his/her account. This is the most prominent reason automated trading systems are rising in popularity as they enable forex traders to efficiently place orders and complete trades without any hassle.
Overall, traditional forex trading i.e., manual trading requires the trader to keep an eye on the chart and try to determine the best course of action based on the state of the market. This can be very demanding in terms of time and stress. With automated trading, the trader is relieved of all work; the computer handles everything. You can achieve better results by working harder but it takes a lot of time to develop the right amount of discipline and knowledge. Furthermore, automated systems are a profitable way to earn money in the forex market but they don’t guarantee you success all the time. The forex market is risky and highly volatile. There will be times when even the automated trading systems make mistakes and you’ll end up in losses too. It is crucial to pick the trading type according to your objectives and trading goals.