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ALGO TRADING VS MANUAL TRADING

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 :-

 

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