Why not automated trading? Why manual? why indicators? from a professional perspective.

17 February 2024, 11:19
Nardus Van Staden
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The question of whether it's better to trade manually or with an expert (such as an automated trading algorithm) is subjective and depends on various factors, including individual preferences, skills, and market conditions. However, I outlined some reasons why some traders may prefer manual trading over relying solely on an expert advisor:

  1. Human Intuition and Decision-Making: Humans possess intuition and emotional intelligence, which can play crucial roles in trading decisions. A human trader can assess not only the market conditions but also their own risk tolerance, financial goals, and psychological biases. These factors can influence decision-making in ways that an expert advisor, which operates purely based on programmed rules, cannot replicate.

  2. Adaptability to Market Changes: Markets are dynamic and constantly evolving. What worked yesterday may not work today due to changes in market sentiment, economic indicators, geopolitical events, etc. Human traders have the ability to adapt to these changes more effectively than automated systems, which often struggle to adjust quickly to new market conditions.

  3. Complexity of Market Analysis: While indicators can provide valuable insights into market trends and potential trading opportunities, they can also be subject to interpretation and may not always capture the full complexity of market dynamics. Human traders can incorporate a wider range of information sources, including fundamental analysis, news events, and qualitative factors, into their decision-making process.

  4. Risk Management: Effective risk management is crucial in trading to preserve capital and achieve long-term success. While expert advisors can be programmed to adhere to specific risk parameters, human traders have greater flexibility and discretion in managing risk, including the ability to quickly exit trades in response to unexpected developments or adverse market movements.

  5. Emotional Discipline: Emotions such as fear, greed, and overconfidence can significantly impact trading decisions and lead to irrational behavior. While automated systems are immune to emotional influences, human traders must cultivate discipline and self-awareness to overcome these psychological hurdles and maintain a consistent trading strategy.

Ultimately, whether manual trading or using an expert advisor is better depends on individual preferences, skills, and objectives. Some traders may prefer the autonomy and flexibility of manual trading, while others may value the efficiency and consistency offered by automated systems. In many cases, a combination of both approaches may be the most effective strategy, allowing traders to leverage the strengths of each method while mitigating their respective weaknesses. Just understand, while automated trading is sometimes good, it will never replace the trader.


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