The two words are totally different when it comes to trading. One which is controlled by machines and the other which is controlled by Emotions.
YES ! You have read it right. Manual trading is the trading where your Emotions somehow affects your trading decision.
Well let us understand in detail about each of them.
- ALGORITHMIC TRADING –
- Emotionless Trading or disciplined trading
- Can have 1000s of trades at a single time
- No limit to scale up strategies on different instruments simultaneously
- No or negligible human intervention is allowed
- Back tested strategies – draw downs already counted
- Less chances of errors
- MANUAL TRADING –
- Discretionary or trading which involves emotions
- Can handle limited number of trades at time
- Cannot be scalable to different instruments or stocks at particular time
- More human intervention is required
- Random trading which involves discretion
- More chances of errors
This does not mean that Manual Trading cannot be successful. We see a lot of Manual traders also profitable within our society. The main problem one shifts to ALGO trading is to avoid human emotions and scale things to a bigger level.
ALGO trading goes with a certain process which we will be covering below :-
