There are traders who trust their money to an automated trading system and others like to pull the trigger, here are the advantages and disadvantages of each …
Let's look at both methods in more detail.
1. Time efficient
Once you a system, all you need to do is follow the signals and this should take you around 30 minutes a day.
All you do is follow the trading signals, so it gives you a consistent, objective way of trading the markets and executing trading signals.
1. Losing Periods and Discipline
The major problem comes when you have to apply the system with discipline through losing periods.
Do not believe what some vendors tell you about trading with little or no losses. A losing period can last for weeks or even months and you have to stay disciplined and keep implementing the system. This means you must have confidence in your system and know how it works, to keep going until you hit a home run.
2. Beware of the Myth
There is a view that you can make money with automated forex trading with little or no risk and not even understand what your doing – this is rubbish.
There are many vendors selling forex robots who will tell you this and the ones that do, normally only have a simulated, made up track record and that's just a test not real money.
If you trade a forex trading system be realistic.
Annually, with a proven system you can compound about 30 – 100% on the best systems; your drawdown will be typically 30 – 50% and last from a few weeks to a few months. These are the best systems and what you can expect.
Most people who claim that automated trading is superior to manual trading forget one key point – any computer is only as good as its rules and there made up by humans also, a human can do something a computer can not – it can think for itself. This is a huge advantage in trading and most of the major funds, banks etc do not rely on total automation, they're on humans and their judgment.
The application of mathematical theories can not beat the market as many claim – why?
Because markets do not move to a mathematical formula!
Think about it, 50 years ago 95% of traders lost and the same ratio applies today and that proves the point. In the period vast strides have been made in PC processing power and software but it has not helped the losers.
If you are playing an odds market which forex is, the human brain is more powerful than any computer in terms of it has the advantage of independent thought. The myth that computers are superior to humans as traders is absolute rubbish – there as good as the human who programmed them!
So which is best?
I think there are some good forex trading systems and they can make money but I like to run both manual trades and automated programs. In manual trading I still have rules but can adjust money management and other parameters and feel in control.
The World's Most Powerful Computer
People who say that markets can be predicted are talking rubbish and with a technical system all you can do is react AFTER The event. A human can see the whole picture – fundamentals, sentiment, technical levels and make a judgment BEFORE the event. Do not under estimate your human brain!
Combine the Two
The choice of manual or automated trading is a personal one but my choice is a combination of the two and all my trading has manual override and in an odds based market, that's a huge advantage to have.