Manual or regular trading is different from automated trading in several aspects. Manual trading involves direct trading through online trading account whereas in automated trading one just has to set the limits for each criterion and accordingly the system will perform various functions at specified timings.
An automated trading system works better with advanced trading softwares. It is similar to how our computer’s operating system improves the performance of various softwares run in our computer. However, sometimes the trading systems are integrated with softwares which perform just like a robot.
With constant increase in demand for newer and better trading softwares our markets are flooded with hundreds of them. However, not all of them are reliable. Every automatic system and software has unique levels of performance and automation capacity. Some of the systems prompt the user for undertaking a particular action. For instance, if the price level for a currency which the user has bought decreases beyond a certain limit then the software quickly gives a warning signal to indicate the user that his loss limit has been surpassed. Now, he has the option of exiting the trade at that precise point or he might chose to wait till the prices rise again so as to minimize the loss or to earn a profit. However, the user should go for the later option only if he is sure that the prices will fluctuate back to a higher level. This is where the need of market fundamentals or manual skills arises.
To know the behavior of a currency’s exchange rate the user should have a certain minimum knowledge about its background. Technical behavior of the currency is also an important factor which will help you to take quick trading decisions. Whatever currency you are dealing with you must know the rate at which its prices tend to bounce and how often it touches troughs. The price fluctuation patterns usually react conventionally to the overall financial and marketing activity of the country to which the currency belongs. Increased speculation and transaction demands for money in a market increase the value of a country’s currency. Further, the time zones of different markets, bank policies, interest rates, government rules, new international trade rules and similar fiscal and financial events are either followed by a positive or negative price movement for a currency.
Thus, even though automatic devices save time and energy, you are left with the decision making part of a transaction. Nowadays, most of the programs do all the work on its own without asking the user. Such systems ask for more input values at the time of initial settings to better calculate the profitability and loss involved in a particular transaction and accordingly take actions. Automated systems make you follow a fixed trading strategy which you will be finding very beneficial over time. It doesn’t give way for your momentary instincts to make risky decisions. The best option to control the extent of losses you might incur is to enter a stop loss order. This will automatically terminate your trade when the prices fluctuate beyond a certain limit in an unfavorable direction.
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