Some time ago, I made the poll asking the audience from the social media the following question: "What type of trading do you prefer?" The options were: - Manual Trading - Auto Trading - Both Types To make everything clear, let me describe each type:
Manual Trading - it is any trading when you open, manage, and close trades by yourself. You can trade using signals from your trading strategies, or you can use trading signals from other traders. What is very important for such type of trading? You need time, knowledge, and experience to do this job properly.
Auto Trading - it is trading where you use trading robots or any copy trading services. You also get signals, but they come from other sources. The main difference from manual trading is - you don’t need to open, manage, and close trades by yourself. Everything works automatically.
The vote results surprised me, and I decided to comment them and recommend the right type of trading based for different conditions.
I will share with you the results of that poll in the updates, but before it, I offer you to take part in voting too. Please, pick the best option for you from the list. Write about your selection, why you prefer Manual, Auto or both types of trading.
So, let's start! We have to think about the right choice of trading type from different points of view. We have to take into consideration your status, knowledge, and experience level, and what do you want to get from trading.
STATUS If you have a full-time job, probably you won't be able to spend much time on trading. What should you do in such a situation? You can use high timeframes like 6H, the daily, and the weekly for searching trading opportunities, opening, managing, and closing trades. When you have a full-time job, you can trade based on your trading ideas or use trading recommendations from other traders and experts. For such type of trading, you need to have enough money, because high timeframes need wide stop-loss sizes. As a result, solid capital will be good for such type of trading, and it will allow staying in the borders of the proper risk and money management. If it is your case, manual trading can be a good choice for you!
But what if you don't have solid capital? If so, you should trade on lower timeframes to get small risk per trade. You should use hourly and minutes charts for searching trading opportunities, opening, managing, and closing trades. But, you have a full-time job and... you have a conflict between your wishes and your opportunities. If you don't have time for trading based on lower timeframes, you should not even try. It will lead you to skipped trades and unpredictable results. But what to do in such case? Automative trading is the best choice. You can use trading robots or copy signals from signal providers. All trades will be opened, managed, and closed automatically on your account. So, using this service like auto trading will allow you to trade in the right timeframes without skipping signals. But what is more important, it will allow you to follow the proper risk management.
KNOWLEDGE Let's look at trading from another point of view. You have knowledge about how to trade properly in the financial markets. If so, you also can try to use manual trading for making profit. Of course, if your status and financial situation allow you to do it. If you have the knowledge, but you don't have time or solid capital - in such way also welcome to auto trading.
If we talk about you, like a novice trader without knowledge at all, you should forget about manual trading at least in the beginning. If you start trading, even if your status and financial situation allow you to do manual trading, without knowledge, you will have amazing chances to lose all your money. Trading without knowledge leads to zero on your trading account. It is just the question of time. If you want to protect your money, auto trading must be your choice. Here we also talk about different types of auto trading like trading robots and copy trading services.
EXPERIENCE This point of view is close to the previous one. Knowledge and experience are the key elements of any profitable trading. If you want to be successful in the financial markets, you must have knowledge, experience, time, and enough money for manual trading. If you don't have at least one of these elements, it will be better to focus on auto trading.
YOUR GOALS IN TRADING And here, let's look at the possible trading type based on your goals. If you want to become a PRO trader and develop yourself in this field, of course, you need to focus on manual trading. This type of trading will provide you good experience and understanding what is real trading. You can trade manually but not from the beginning. For starting, auto trading will be better. It will allow you to avoid stupid mistakes, protect money, and get experience. But when you get the basic knowledge and add experience from auto trading - you can switch to manual trading.
If your goal is to get an additional income only, auto trading is the simple and proper way. You don't need to spend time on trading, but you can get profit from trading. Sounds great! Don't you think so? You can use trading robots as a possible option, but copy trading should become your best choice. For using robots, you need at least minimum knowledge of how to set up trading robots, how to install robots and settings. Copy trading will need from your side several clicks on buttons and nothing more. Copy trading is the simplest solution for trading in the financial markets for everyone.
In this post, I tried to explain to you what type of trading will be more suitable for you. As you can see, you need to take into consideration at least several important things. The right choice will help you to make a stable profit and feel comfortable. At the same time, picking the wrong option will lead you to blow up your money.
And one more thing I would like to add. Manual and auto trading have their advantages and disadvantages. They are not perfect, but they are both workable if you know how to use these types of trading properly. Manual trading can be more interesting because it allows following market conditions closer, of course, if you know how to do it. But auto trading allows you to cover many markets and timeframes at the same time. It means we have better diversification and lower risks. Auto trading allows you to trade in a FREE emotional way. It is a very solid argument for auto trading, because emotions, especially for novice traders, are the reasons for making mistakes. Mistakes in trading lead to blowing up capital.
Also, I would like to advise you to use both types of trading. This option allows you to optimize your trading based on your opportunities and goals. Just combine in your trading portfolio manual trading based on signals from your trading strategies, with trading robots and signal providers. You will have an amazing opportunity to diversify your trading and reach much more stable results in the long run. At the same time, you will have opportunities to grow as a trader getting knowledge and experience from real trading. This combination is powerful and with many advantages!
I hope this post gave you some ideas about what to do and how to trade. If you have questions, please, leave them in comments. Let's discuss! I will be grateful if you support this post by your likes!
While some of the advice given in this post is good, I strongly disagree with a few points.
- Size of trading capital has no effect on trading frequency or time frames chosen (provided the exchange/broker fees don't rekt every high frequency trading strategy)
- Copying trades is never a good option. A solid understanding of each trading strategy, whether manual or automatic is mandatory.
Confucius_The_Great
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@Confucius_The_Great, And many newbie lose every penny. Even one of my irl friends went too fast and lost a big chunk of his capital. If it was not for me he had likely lost every penny he had in crypto by now.
DLavrov
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@coinselor, thank you very much for your feedback! Let's make it clear with these 2 points where we can discuss more.
- a monthly candle/bar will be much bigger than 4H or 1H candles/bars. A weekly or daily candles/bars will be bigger than 1H, 15 minutes, 5 minutes candles.bars. What does it mean? It means that you will have different stop sizes which mainly are based on swing highs and swing lows. Even if you use trend lines and support and resistance levels, higher timeframes won 't allow you to have an entry as close as possible to them. All these things make your stop size bigger with higher timeframes = it increases your risk size. If you trade with 10 000usd capital, your risk can be 1% based on the weekly trading, but it will be 50% risk per trade if you use the same timeframe but with 500USD capital. So, only lower timeframes are good for small deposits. Big deposits can be used with any timeframes.
- even if you understand a trading strategy perfectly, even if this is the best trading strategy in the World, it does not mean that you will be able to make profit in the long run. Any drawdown period can destroy your plan and you will start making mistakes - your emotions will help you to destroy your plan and the deposit.
Copy trading can be good or bad. It depends only on the source of signals. Signal providers can be good or bad, robots can be good or bad. It is the question of signal providers' quality and nothing more. If we talk about copy trading as a solution - it is one of the best opportunities which everyone should use.
coinselor
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@DLavrov, my point was that anyone can trade any time frame regardless of starting capital. Of course the ATR of a weekly candle will be bigger than an hourly candle. However, that doesn't mean that I need to risk more money per position, provided the allowed minimum capital to start a position is small enough.
For example, in Bitmex, the minimum amount of money to open a position is $1 (since that is the size of the contract). Thus, with a $500 capital, I open a position risking 5 dollars on every time frame regardless of how far away the stop is. Is the stop 50% away from price? no problem, open a position with 10 contracts (10$) and you will be only risking 5.
DLavrov
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@coinselor, I need to understand your way for calculation. But even without it you don't take into consideration cost of pip, leverage trading in Forex markets and the minimum lot size which will require the min deposit. Bitmex and this example, just tell us about crypto trading which is not the only one thing we should do.
coinselor
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@DLavrov, You are correct. Since in Forex minimum lot size is fixed at a much higher dollar amount, bigger candles will mean bigger risk, as you stated.
My bad, thread was on a cryptocurrency market so I assumed that as context for the information. Smaller minimum position sizes is definitely an advantage crypto has over forex.
Regards.
Toonpro
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Hello ! Many thanks for this interesting article.
I ve one question...and can t find the answer...
I scalp and I would like a friend of mine to autocopy my trades... is this possible ?
We are both on tradingview and related to the same broker (tradestation)..
- Size of trading capital has no effect on trading frequency or time frames chosen (provided the exchange/broker fees don't rekt every high frequency trading strategy)
- Copying trades is never a good option. A solid understanding of each trading strategy, whether manual or automatic is mandatory.