Automated Trader vs Manual Trader

Discussion in 'Automated Trading' started by WmWaster, Jun 22, 2006.

  1. Hi. Ideas gatheirng time. :D
    I would like to hear people's opinions on several issues.

    How do you compare between automated system and manual trading? What're their pros and cons?

    What makes you feel automated trading is the best way to go, if you think so?

    Do you think automated system can beat manual trader?

    Can automated system get close to or even suprpass what some successfully manual trader achieve (eg traders from $10k something to millions in a few years)?

    Thank you!
  2. nbates


    Think about it in the context of LASIK Eye Surgery and you will get the picture.

  3. I get a picture, but I wonder if my picture is the same as others.

    That's the main reason of this post - to know each other opinion.

    Anyway, thanks for your post. :)
  5. I think automated systems are more for scalpers sense for a trader like myself, I dont care about slippage of a few pennys.

    Problem with automated systems:

    1. Traders puts too much faith in their system

    2. If your system fails, you are now less disciplined because you're so used to having everything done for you.

    3. Automated systems can't possibly calculate all the factors that move the market.

    - nathan
  6. Thanks scalper21 for your great inputs.
    Thanks to cashmoney69 too.

    One of the nicest thing I found in automated trading is it can trade 24 hours a day non-stop. I can earn money even if I'm sleeping.

    In addition, it's nearly effortless after you have developed your system. It is run automatically. You don't need to spend efforts as manual traders have to consistently (although automated trader may need to maintain their systems once in a while).
  7. Yes, and it seems automated system cannot achieve such high percentage of succuess some manual trader may attain (eg 80-90% accuracy). The drawdown is thus larger.

    Another problem I could think of is flaws and bugs. If the system malfunctions, how seriously would it hurt us? If the trading platform encounter problems while the system is running (eg positions opened, but stop-loss can't be executed due to some communication problems from trading platform), how could we do?

    Not to say, it seems it is difficult, or impossible(?) for automated systems to turn $10,000 to millions in a year or so.
  8. After all, what do you prefer - automated trading or manual trading?

    What trading strategies do you employ?
    (From your name, it seems you involve in scalp trading)
  9. I love it when people try to convince themselves that the auto-traders cant and are not doing as well or better than the discretionary traders. Please keep it up.
  10. toe


    scalper21 good post.

    I'd like to add that I read a lot of posts saying that auto cant get the results that manual trading does and I think that should be analysed somewhat.

    I read traders saying they can make discretionary trades based on a wider spectrum of information, or alternatively based on situations that are too subtle to analyse mathematically. But there are only two possible explanations for how we make discretionary trading decissions. Either we mentally calculate and estimate, or we use ESP.

    My untested assumption is that ESP doesn't work, and that we mentally calculate and estimate, and those are both actions which can be automated. If you can't automate your trading decissions then you dont fully understand them or haven't fully tested them.

    Also I'd like to point out that it is very difficult to definatively test whether discretionary is better than automation. In regression testing the more 'degrees of freedom' you have, the higher the 'confidence interval' thats required and the more data you have to have backtested. But in discressionary trading there is no knowing how many degrees of freedom there are. There is the potential you could need an infinate amount of backtesting to get 95% confidence. And the catch22 is that if you make a mental decission to limit the degrees of freedom in discressionary trading, then you might as well automate your system.
    #10     Jun 27, 2006