I know that trading robots have their advantages and disadvantages. I also know that manual trading has merits and demerits. Before the advent of EAs, some people were trading manually: this is a fact. Then, in your own opinion which one do you think is better or is the ideal? Would you advise someone to go manual when trading or go automated when trading? Which one promises everlasting success?
A vote manual with a caveat. I think that using automated processes to execute some actions on behalf of the trader is perfectly viable provided the trader actually understands what’s going on. I view EA’s very much like any tool. A skilled craftsman should be able to wield it well with precision while the inexperienced may end up cutting off a hand. I think it’s pretty much the same thing.
There are obvious benefits to using some automated processes but I don’t think I would ever want to solely rely on a robot to do the work for me. That would just provide plenty of time for my skills and knowledge to dull without continued practice. And what happens if that particular EA breaks for some reason? Invest a couple of years in learning how to wield it properly and then it goes away?
Yeah- I can see the benefit but I don’t think I would ever want to put that much faith in an algorithm or EA.
Manually trading is better because the trader is in total control. EAs are built to execute a particular trader and it is not sensitive to changes in the market. An EA is set to trade and take profit or stop loss when possible, but it does not know what happens around it.
Manual discretionary trading is far easier.
The reality is that very few people are ever going to give away (or even sell) a 100% mechanical rule based edge. By that definition, on the balance of probability, purchasing a commercial EA is a waste of time, following any mechanical system found on a forum is a waste of time. The problem is these things are influenced by survivorship bias, so you’ll always get people who bought an EA or followed a system who did well, and they tend to shout about it. The ones who didn’t do so well tend not to shout quite as loud
Take a look at myfxbook, collective 2 or any other trade audit sites tracking mainly automated strategies, out of hundreds of thousands of users how many can show long term profitable results ? The sad truth is that there are less than you’d expect by random chance !
If you took 10,000 monkeys and trained them to press a buy or sell button, as a group, they’d do better than the group trading on myfxbook, which is kinda funny. The other is that the results on many of these sites are very easy to fake, and vendors do so constantly, so the reality is even worse than its being portrayed.
I think that gives a pretty good indication of how hard automated trading really is, but having said that, there’s a lot of very useful lessons to be learned from going down that route.
Well said. Automated Trading does not guarantee long term success even if it does work. These are a programed software that only does with it has be set to do. The market is ever changing. The only way to successfully use EAs is if you keep buying the latest one. What are the possibility that you would find a good one all the time?
I have tested on only one EA and I wasn’t satisfied. Its not wise to rely on robots to make you money else you get disappointing. Its better to focus on how you can effectively trade manually.
I like this.
Personally I think both discretionary and automated/EA has their place. I think i am probably one of the few that does both. But all my trading is based on quantified research, both discretionary and automated. So they have that in common. Most people just dont have the coding and mathematical know how to create profitable EAs. But I wouldn’t call discretionary “easier”. Some people are better suited for one or the other. Both are just tools, they can both make you or lose you significant amounts of money.
EAs dont necessarily need to be rigid, that’s an assumption people make that is incorrect. Machine learning, neural networks, genetic programming, and staged re optimization all allow for the EA/Algo to take in new market information and adapts the parameters and rules for the more current market environment. Will you get that kind of stuff from the internet for 199.99? Definitely not. That’s the difference, if you truly know how to make them and use them properly you have just as large a tool set as a discretionary trader if not larger. Why i say that is because if you can code up stuff you can run lots of statistical analysis on the market which makes your discretionary trading much stronger. than if you couldn’t.
I believe manual trading is way better than automated form of trading. Nothing is than doing things your own way. Robots can be difficult to set up and to use.
Good question.
For now, I would say yes.
I come from an IT background, a long time ago I tried to develop profitable EAs. Now I know, before you can develop a good EA, you have to be a good trader first.
Maybe I’ll cahange my thinking, but for now, I think manual trading is better. You can adapt easier to market changes.