At some point, every trader considers using trading robots. Is this solution practical? Does manual trading really fall behind robots? Is it true that using advisors can generate more profit? Let’s explore these questions in this article.

Which is More Profitable?

It’s hard to say definitively whether advisors or manual trading are better. The only thing we have is many examples of forex contests where trading robots outperform manual trading. However, manual trading remains a classic form of trading and is still very popular despite various factors.

When news breaks about a plane crash filled with advanced electronics and resulting in the loss of lives, the term ‘human factor’ comes up. Engineers try to predict, anticipate, and reduce the risk of such events through maximum automation in all possible situations.

Similarly in trading. What counts as an error: an incurred loss or deviating from your trading system rules? Clearly, the latter, as while losses are natural in trading, a loss due to knowingly breaking your own rules is a mistake. Every trader who trades manually makes decisions influenced by their psychological traits. At times, emotional stress leads to errors.

Common Causes of Trader Mistakes

• External Factors. For example, unexpected fundamental events like a central bank official’s statement or revised statistical reports;
• Automation and Information Limitations. A person cannot keep complex algorithms in mind at all times;
• Trader Psychology. Errors caused by emotional states and individual characteristics. Examples include emotional tension, excessive sensitivity, impulsive behavior, and reduced attention.

Additionally, in time-sensitive, non-standard market situations, lack of information can also lead to mistakes.

Are certain types of traders—intuitives, technicians, and fundamentalists—less affected by these factors? Data is shown in Figure 1.

Fig. 1. Vulnerability of traders to different factors.

Trading on Autopilot: Pros and Cons of Using Advisors

The advantages of using trading robots are obvious from the first factor—time. Set up the advisor and you’re free for 24 hours. The robot handles all intellectual tasks. Unfortunately, a trader cannot trade around the clock. During this time, they can test other trading systems, expanding their arsenal with new advisors. In any case, this time can be spent on personal activities.

Accuracy. Traders make many mistakes: from simple ones—looking at one currency pair but opening trades on another—to opening positions with incorrect volumes as planned in money management.

Speed. A trading robot can monitor multiple financial instruments simultaneously and open trades in fractions of a second when an event occurs as defined in the code.

History. Testing an advisor on historical data is a convenient and revealing feature of its trading performance. Doing this manually is more difficult. First, it takes longer, second, when testing manually, we see what we want, and third, the statistics generated by the tester are much more indicative than handwritten records.

Fig. 2. Manual vs. automated trading metrics.

Emotionlessness. Much has been written about trader emotions. Books by Lars Tvede or Thomas Oberlechner explain this in detail. There are also many psychological techniques. Emotions are disabled in a robot.

Situational Adaptability. An advisor may struggle in non-standard or extreme situations because it follows a pre-written algorithm. A human adapts to the situation. It’s hard to assess the outcome of such actions. However, during major news releases, such as Non-Farm Payrolls or currency interventions, traders often stay on the move, against their own rules.

Today, there are almost no problems with writing an advisor. There is a wealth of literature, webinars, and articles online detailing all the steps. Ultimately, you can always hire programmers who specialize in this.

Advisors expand the understanding of market operations. Their advantages over manual trading are evident across many metrics. Trusting completely in any robot with the most attractive description should be done with caution, treating them as tools or methods of automation rather than as money-printing machines that solve your financial problems. The real challenge remains monitoring the robot, which is a task for a living person. All the best in trading!

FAQ

What are the main advantages of using trading robots in Forex?

Trading robots save time, improve accuracy, increase speed, and eliminate emotional decision-making.

Can manual trading be more effective than automated trading?

Manual trading can adapt better to unique situations, but it is prone to emotional and psychological errors.

Are trading robots reliable for long-term use?

While trading robots offer many benefits, they require careful monitoring and should be used as tools, not as guaranteed income sources.