Forex trading is a profitable venture and it can help any investor to earn well if they spend adequate time learning forex techniques, studying forex market and grasping how it actually works. It is a long process and to make anything faster and easier, we have online platforms for everything. Anything that could be found in a local market can now be delivered easily at your doorstep using online websites and applications. Even the forex market isn’t much behind. Currency trading in the foreign exchange market can be done in either traditional or modern way. It could be performed either using manual forex trading or automatic forex trading. It is a very common topic among forex traders. Since each coin has two sides, similarly both these types of trading have their pros and cons.
Both forms of forex trading are equally preferred. Traders with good intuitions about the market usually prefer to adopt their own forex trading strategies based on comprehensive research about the foreign exchange market and trade manually. While traders who can devote lesser time and effort prefer automatic trading over manual trading because it is a mode of trading that has been tested by experienced traders.
• Manual Trading is a form of a trading system wherein an individual uses his own collected information to analyse the foreign exchange market. And on the basis of that, he decides how and where to invest. This is mainly done by studying the forex charts.
• Automatic Trading is a form of a trading system wherein an individual employs a computer-oriented software/program in his place to invest and gain returns in the foreign exchange market. These programs are directly linked with the market data. These programs are usually bought from different websites.
Decision – Making
• Manual Trading involves human decision making for any transactions and also while entering and exiting the foreign exchange market. The decisions by using manual trading systems are mostly calculated but can be intuitive as well. Also, the investor might or might not stick to the trading plan.
• The decisions by automatic trading systems are calculated and hence assured. Also, it sticks to the trading plan. Also, the transactions are more disciplined and are prone to lesser mistakes.
Scope of Analysis
• Manual Trading is based on the human mind which can be restrictive and will get easily tired of reading and analysing different forex charts. Missing any important information could be misleading and dangerous as well. Also, it is difficult for any individual to know about many currencies and their concerned economies.
• In case of automatic trading, the software has a wider scope of detailed analysis. Therefore, it can set up better forex trading strategies. Also, this system could also be involved in multiple currency pairs at the same time, handling multiple transactions at the same time.
• An investor who is involved in manual trading can’t be updated every minute about the foreign exchange market. However, he/she must constantly know the details.
• On the other hand, the investor who is involved in automatic trading will get all the updates as the program can update itself every minute without getting any extra effort from the investor.
• Manual trading can help to earn better profits than automatic trading as there is a scope of experiments. A human can experiment on the basis of current market trends.
• Automatic forex trading helps in keeping greed in check. Also, it helps in overcoming fear from losses if any of them have been incurred in the past. Instead, it can help in improving their trading profitability.
Human Mind v/s Software
• Manual trading is based on a human can observe and predict. An investor can observe that the market is moving slow and pull out his trade. Moreover, a human mind is far from calculative than any robot or program. Thus, more rational decisions can be made if greed is handled properly.
• Automatic forex trading program only works on rules. Once a forex strategy is designed, a program will only work on that. It wouldn’t deviate from it. However, in certain cases, instincts can play a major role in the forex market. A calculated risk can do wonders. But this might be missed by a computer. Automatic forex trading programs work on the pre-set rules and charts. So, there is barely any scope of experiments.
• The best thing about manual trading is the control which is ultimately in the hands of the forex trader.
• Automatic trading gives all the control to the program. So, each investor must research properly because many websites or programs turn out to be frauds at the end. So, beware of such fraudulent ideas and false hopes.
Overall, the manual trading system gives you an upper hand here because with this the traders have the freedom to trade upon their own choice. They can trade in any dynamic situation and try different strategies according to the ever-changing and evolving market. No machine or individual can take more care of the individual’s money and investor himself. However, no manual trading or automated trading system can promise or provide a consistent profit. Automated Forex trading systems are highly popular because they help in minimising a lot of the work. This is highly attractive and useful for a novice who is still learning how to trade or an investor who wants to invest in the Forex market without spending a lot of time mastering the market.