Talking about automated trading and manual trading which type of trading is best and why? Below are my opinions.
It actually depends on whether you are news traders or technical traders.
I personally do not trade on news or reading fundamental news.
My trading style is 100% technical and based on 100% mechanical system.
For the first 3 years in my LIVE trading (2010 to 2012), I only used manual trading system as I believe if it is true that EA can really make money and profitable, then there are no poor people in this world.
Since Jan 2013, somehow my mind was changed, as i realized that there is no different in term of the results or profitability of a 100% mechanical system, whether I trade manually or automated. And this is where I start to go for EAs. So how come there are still many poor people in this world? I am still looking for the answer…
During my experience with manual system for past 3 years, sometimes when I find a good strategy, it works for a while, then I am happy. but when it doesn’t, its very easy for me to lose confidence on the system and start making bad trades after bad trades. Before I realized it, I am 50% down in my account capital. There is no way I can know whether the system will give more winning trade in future. End up I have changed more than 10 different strategies over past 3 years and my account experience 70% capital drawdown.
When I’m trading EAs, I will first backtest the EAs for 13 years (2000 till 2012) to see how is it performing. Understand that backtesting is not accurate and may give better and more profitable compared to real LIVE trading. I will minus out 10% – 20% for the profit and add on 10% – 20% for the maximal drawdown. If it fits my trading goal and criteria, then I will going LIVE with this EAs. This give me more confidence to stick with the same system even though I experienced consecutive loss, as I know the winning trades will coming soon.
There are 3 main types of EA:
1. Trend Following
There is no “Best” type of EA. The market conditions change all the time, so your best bet is to have more than a strategy. For those with smaller risk appetites, you would be quite safe just sticking with good Scalping EAs and Trend following EAs. Martingales work by a double-up-if-you’re-wrong approach, and are good in delivering a stable, predictable growth, but only if you don’t run out of money to double up.
For me, I will only go for trend following EA at this moment.