Thread: Automated Forex System vs The Human Trader

From: dairlyfx.com

The Human Method Trader

If we assume that a trader is using a method or system in his trading based on some entry and exit criteria to each trade, in the final analysis, it is he/she who still has to make a decision whether to enter and exit the trade. In other words, there is always the human element to consider. Even though the system tells the trader to enter a trade for some psychological reason he decided not to go ahead with it.



A likely explanation which a lot of traders can identify with is when the system was wrong on a few trades and the trader then decides to sit out the next trade, only this time he has to endure the pain of watching it make a large profit which he missed out on.

There lies the weakness of the method trader. Even though he knows he should enter or exit a trade he doesn’t because at that particular moment in time for some reason some voice inside him tells him not to do it.

The human method trader also suffers from the basic human emotions of fear and greed.



Automated Forex Systems (forex robots)

The computer involves no emotion in the decision making process. If the system says buy then the buy order is automatically done for you. It is consistant whereas the human trader (or at least 95% of them), are characterised by inconsistency.

Furthermore, a trading system might throw up a buy signal which the human trader will look at and dismiss because at that particular time it didn’t look obvious or rational. Unfortunately, sometimes the best trades arn’t obvious. Again, the computer software won’t make this mistake - it is consistant.

Lastly, automated forex trading software takes away all the emotional up’s and downs in trading, in particular fear (in taking a loss) and greed (in taking a profit).

I don't feel that automatic trading system can be fruitful for long term as everything is programmed so it cannot be flexible and after some time it is utmost certain that with auto trader has to suffer loss. Loss is marginal or huge it totally depends on the trader destiny. but loss is very much certain. but when you trade with your brain even though you suffer loss but you can learn something you can understand better what are the reason for which you loss.

The bottom line is human brain is better than auto trader.