Between manual trading & automated trading

Introduction

Online trading has opened the financial markets to the general public by making trading simpler, quicker, cheaper and more accessible. Nowadays, online traders can place trade orders from the comfort of their home at any time of the day or night!

Online trading can be seperated into two categories: manual trading and automated trading, also known as algorithm trading. Many online brokers offer both systems but most only offer manual trading as algorithmic trading can be expensive.

Manual Trading

manual trading

Manual trading is the main service offered by online brokers. They give traders access to an online trading platform which will, in turn, give them access to the different financial markets. The online brokers act as the bridge between the online traders and the financial markets.

While many online brokers such as Markets.Online do help their traders, providing them with live market updates and even trading signals, the final decision is in the hands of the traders. They are the ones who have to decide which investment opportunities have the potential of being profitable. Moreover, they have to place the buy or sell orders manually, hence the term manual trading. And once the positions are open, the responsibility of monitoring them and deciding when to close them rest solely on the traders.

Automated Trading

manual trading

While manual trading is a definite upgrade to the systems in place before the popularisation of the internet, automated trading is one step above! These systems were created some time back but were only accessible to large corporations, big banks and wealthy investors. However, these last few years, with the advancements in technologies, some online brokers offer automated or algorithmic trading to individuals as well.

As the name may suggest, this system uses complex algorithms to find the most profitable trading opportunities. Once the opportunities are identified, the system automatically places the trade orders. It then automatically close the orders at the most favourable moment to ensure the maximum amount of profit is made.

Differences between Manual and Automated trading

Manual Trading Automated Trading
Identify best trading opportunities Traders Automated system
Place trade orders Traders Automated system
Close trade orders Traders Automated system
Speed Limited Can place tens of hundreds of orders in seconds
Accuracy Error-prone Never makes errors
Stamina Limited – Traders need rest, must eat, must sleep, etc Will trade 24/7
Decision making Prone to emotions Purely scientifically based