The decision to trade automatically or manually can at times be a difficult one to make. Some people prefer automated trading over manual trading because it is a mode of trading that has been tested by experienced traders. Alternatively, some traders - especially those with good intuitions about the market - prefer to adopt their own trading strategies based on comprehensive research about the market and trade manually. In short, before deciding on which type of trading to adopt, one should be aware of their respective advantages and disadvantages.
The quickest way for a novice to learn about the market is to engage in manual trading, which enables a trader to open or close his market position whenever he chooses. To open a trade is relatively simple: one only has to place a deposit, select a currency pair to trade in, determine the direction of the market trend, set the leverage level - specifying the stop loss and profit taking points - and then open the trade.
The steps listed above can be carried out whenever traders decide to act; for example, upon the release of an economic report that causes prices to surge. As such, manual trading can be extremely satisfying, especially for traders who spend considerable time following market behavior. That said, successful trades of course also require discipline and good money management skills.
Automated trading, on the other hand, is an extremely good way for novice traders to build up confidence about the market in order to prevent their weak psychological profiles from affecting trading. In addition, they are also able to use tested and proven strategies to help ensure the success of their trades. Even experienced traders, in fact, adopt automated trading to make trading more efficient.
The most obvious benefit in automated trading, as noted earlier, is that it frees traders from time constraints by making the practice of constantly watching the market unnecessary. If a change in the market occurs when a trader is indisposed, the automated trading system will execute the buy and sell orders that have been specified earlier.
Furthermore, automated trading prevents fear and greed from affecting traders’ decisions. Emotion is one of the biggest factors that affect profitability: fear and greed can cause us to close our positions prematurely or overtrade. In automated trading, however, computer algorithms replace the human element that leads to this emotional threat to profits.