What makes more money, manual trading or automated trading?
Okay, so which method is more profitable, manual or automated trading? Now look, this question comes up a lot,
and I want to share my opinion on it, as I know that it is, indeed, a very hot topic.
Firstly, let's take a step back and analyze both methods from a top-down perspective.
So by definition,
Manual or discretionary trading means to place, manage, and close a trade with human intervention.
Simply put, that means you're sitting at your computer or on your mobile,
opening and closing your trade by the click of a mouse.
Everything from why, when, and how much you trade is solely down to your discretion.
Now, it's also important to note here that the rules you live by as a manual trader should be mechanical.
Now, that's not to confuse the definition, but what I mean by this is that you're basing your trades on...
back-tested strategies. That's to say, you're scanning and methodically executing your trades...
just as you've tested in your back-testing. Else if you don't well, then you don't have a strategy.
Now, on the other hand, you have the automated trading. Now, you may also hear this referred to as algo trading or trading...
...with a robot. Now, in our world,
this is done commonly with Metatrader4 or Metatrader5, and it's known or often referred to as an Expert Advisor.
So, an expert advisor is a program that allows you to execute your...
...programming logic or your training strategy that trades for you. Now, what this means is that you're trading with the help of a computer.
Which makes the decisions on your behalf based on the programming logic that you've programmed in.
Now, algorithm by definition means a process or set of rules to be followed in calculation or other programming solving operations,
especially by a computer
Think of this as, though, you're telling the computer what you would do manually, but in code.
But there lied the additional challenge-coding. Now, you can outsource for programmers to write up the logic for you,
but there are risks for that. How do you really know its accuracy?
How do you know it's doing what you expect and that there aren't any bugs?
I mean, you can back test the logic to see the performance,
but what if you're looking for something to just flag signals that you then trade manually?
How do you know if it's doing what you think it should be, every single time when you have no back-tested data.
Now, on the other hand, you can set yourself the challenge by learning how to program and write some code yourself.
Although, I can tell you that is not a small feat by itself.
Learning how to trade, folks,
consistently profitable, is like learning a degree.
Programming what you've learned manually to code is like learning two degrees.
So, it goes without saying that, learning and then programming a strategy in the forex market is..
...definitely a lot longer path, if you're doing this with no prior knowledge.
But the question you really want to know, is which method is more profitable?
Well, certainly there are advantages and disadvantages to both methods.
But I think it's pretty accurate to say that the hardest challenge that many manual traders...
find when starting off, is the psychology behind it all.
You know, it's the inability to keep rational, and calm in losing periods, as well as the profitable periods.
The traders are often unable to follow simple set of rules.
Which ultimately, leads to the destruction of many trading accounts. Now, in this case, automation may be the preferred option.
But then again, think about this, if you are unable to follow your own rules
using manual trading, is it going to be any different when trading with a robot?
Are you going to start doubting the robot when it starts losing money? Are you going to tweak it because you go into drawdown.
Now, the other thing you need to think about is this, market conditions are constantly shifting.
Change in world events are often unpredictable.
And a robot simply isn't able to react as well as a human can in these circumstances.
Also consider this, trading manually can be time consuming. Not only in your back testing,
but also in live trading and many traders when they start off their trading journey,
still have day jobs.
So are unable to spend countless hours at the screens, and remember learning to trade and trading does indeed, require...
...screen time.
Look, the short answer is this, there's no real difference to your bottom line, with your trading automated or with your training manual.
But it's more in how you execute your trading plan and the logic behind your trading plan.
Think of this, if your trading plan or strategy is flawed in the first place,
then it really doesn't matter if you're trading manually or...
...with the use of a robot. And if your training logic or strategy is based on martingale or
good system, then again, when you trade this manually or...
...algorithmically, then you're poised to blow up the trading account. And as for purchasing an expert advisor or robot, well,
I can talk about that until I'm blew in the face on the topic.
But in short, all I ask you to think about is this...
Why is the user selling their expert advisor for a few hundred dollars if it can supposedly make money from the market?
Now, in this day and age a lot of retail traders,
and I think it will continue going this way into the future, are trading using a hybrid of both routes.
For example, you might have an expert advisor which again is on metatrader4
scanning for a specific price action setup.
Which then notifies you when one is found. You can then place and manage the trade manually from there on in.
Now plenty of traders use automation in this regard to be more efficient.
And it also it lowers the chances of missing trades,as well. Which can be very detrimental,
considering, it may be that one trade that you miss that turned out to be the huge winner.
Now, this is something that our team are working on constantly behind the scenes. Now as traders,
we're constantly researching the markets;
looking for recurring inefficiencies in price to exploit for our long term goals. It's what gives us an edge
over the rest within the industry. And in doing so, we found ways to lower human error and improve ad...
...trading efficiency.
We do this by developing specific expert advisors that scan the markets, finding trade, foster trade manually.
It's a critical part of our processes in some of the strategies that we deploy. To give you specific examples,
we currently have two major expert advisors. They're for breakout and...
...reversal patterns. Also, about two at least a third expert advisor that look for long-term trend setups.
And we've coined this "trend surfing", trend surfing expert advisor. And the back testing on this so far, is looking very promising, indeed, with some...
...fantastic results
Look, I hope you enjoyed the video. I hope you found it useful!
Give me a thumbs up if you, did give me a thumbs down if you didn't'. Leave a comment as well, below. If you haven't...
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I look forward to talking to you in the next video, so good luck with your trading!