Key Distinctions between Manual and Automated Trading – Pros and Cons Explained

Irrespective of the level of experience, an investor has at least once been in the dilemma of concluding which trading approach is better – manual or automated?

While manual trading has been there from the very beginning, the automated approach came quite late in the picture with the increasing growth of technology. The core difference between these two trading methods is quite obviously the degree of the requirement of human interference while executing a trade.

Key Distinctions between Manual and Automated Trading – Pros and Cons Explained
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While opting for the best forex robots determines the success rate in the automated trading approach, manual trading, on the other hand, is solely dependent on the experience and expertise of an investor.

Understanding manual trading

As the phrase suggests, this trading method is entirely dependent on the personal judgement which means an investor is solely responsible for carrying out the trades. This means the trader will perform various trading operations from deciding the right time to initiate a trade to scan different markets to identify the best possible opportunity.

In this conventional approach, the result of trade will be dependent on the effort given by the investor. A typical manual trading approach involves a trader scanning through multiple currency pairs based on certain indicators. The trader may either open a position or simply create a watchlist to monitor the price movements until it reaches its desired level.

Some of the preferred strategies among manual traders involve the buy-and-hold approach, swing trading and day trading, while investors frequently use stop loss and take profit indicators to manage a trade.

Pros of utilising manual trading

  • Manual trading is certainly the most effective way to gain knowledge and try your hands in forex trading. It is because as an investor you need to get familiar with and master certain tools, strategies and most importantly learn to make crucial decisions based on fundamental and technical analysis.
  • In this type of trading method, a trader is more likely to have better control over executing a trade. This also helps in determining the possible and avoidable errors that may prevent losses in the future.

Cons of utilising manual trading

  • Despite its advantages, the conventional way of trading can be time-consuming as the trader is required to conduct proper research, review past trades and determine the ideal time to initiate a trade.
  • Another major drawback of this approach is dealing with the sentiment factor that often impacts the trading decisions and drifts the focus from certain trading indicators.

Understanding automated trading 

Contrary to the conventional method of trading, the automated way deals with a pre-programmed system. This trading method encourages a hands-free approach by identifying appropriate timing to initiate a trade based on certain algorithms. Often referred to as algorithmic trading, traders who follow this approach depend on a piece of software that primarily runs on the MetaTrader 4/5 platform.

These systems are responsible for analysing different price charts and activities in the market that enables them to identify certain signals and determine possible gainful currency pair trades. The major benefit of using this method is unlike manual trading, with the help of automation the trader is not required to search for profitable opportunities on their own. Investors can take advantage of this opportunity and focus on optimising their strategies in the meantime.

Pros of utilising automated trading

  • Most traders prefer trading with automation for its ability to eliminate the emotional factor from the trade executions. Being immune to certain sentiments while executing a trade enables traders to focus solely on the statistics.
  • This method of trading also enables the investors to build a diverse portfolio by covering multiple market conditions.
  • Beginners can take the benefit of testing different strategies through demo accounts easily.

Cons of utilising automated trading

  • Although the historical data is useful to determine the capability of the software it does not guarantee the future as the forex market is known for being highly volatile with altering trends coming frequently.
  • This method of trading is comparatively more expensive than the conventional approach.


It is evident that both of these methods are beneficial in their own way; thus evaluating the perks and drawbacks is important for coming to a conclusion of picking the method that will be more suitable to you.

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