What Is a Manual Trader?

A manual trader enters trades into a trading system without using computerized algorithms that enable automated order entry.

In the frenetic world of trading, manual traders may be at a disadvantage compared to t🍰raders who use considerable computing power to exploit pricing anomalies in the markets. Also, manual traders may be more susceptible to trading on emotion c𓆏ompared to a trader relying strictly on a trading program.

How a Manual Trader Works

A manual trader makes buy and sell decisions without relying on automated signals. They also enter trades by hand into a trading system, a process that increases the risk of incorrect or erroneous order entry. Such mistakes can be fraught with disastrous consequences if the error is large. Currency traders therefore increasingly use 澳洲幸运5官方开奖结果体彩网:automated trading systems that enable them to place orders and execute trades꧟ effic𓂃iently through an application programming interface (API).

A manual trader must rely on their own abilities to maintain discipline and carry out trades as planned. Such a trader must be meticulous in their monitoring of trades to avoid mistakes as simple as buying when they intended to sell and ensuring that trades are executed using the right order types, at the correct prices and in the correct quantities. Program traders, meanwhile, leave the work to computerized systems that rely on algorithms and processing power to automatically carry out error-free trades. 澳洲幸运5官方开奖结果体彩网:Algorithms can also process much more data in a fraction o🐎f the time of a manual trader, which is often crucial in id💮entifying anomalies or mispricings that can be exploited for profit.

Advantages and Limitations of a Manual Trader

Manual traders can be influenced by 澳洲幸运5官方开奖结果体彩网:behavioral biases, causing them to make irrational decisions and trade on emotions such as greed or fear. If a stock is rallying on a strong earningsꩵ report, for example, it may rise above the manual trader’s sell target. Like a blackjack player after a few winning hands, the trader may decide🎉 to let the stock run in the hope of realizing an even larger profit. Should the stock quickly reverse, however, the trader could not only lose any additional profits but a portion of their original investment.

On the other hand, manual traders can take advantage of market signals that an algorithm may be una🍸ble to pick up, such as declining volume or wider than usual bid/ask spreads in a particular security. Algorithms trade strictly on scenarios that are programmed in ahead of time while a manual trader can be nimbler and react to breaking news of a merger, an investigation into a company, news about a competitor, or a natural disast🐼er.

Example of a Manual Trader

Jane is looking to trade ABC stock. She decides she wants to short ABC once it🃏 reaches꧒ $60 per share. Currently, the stock is trading at $52.

Because she is a manual trader, she waits a few days to see how the stock is trading. After a week or so, she puts in a limit order to sell ABC shares GTC (good 'til canceled). Once or if the trade is executed, she will get a notification and then decide what her next move is.

Jane is up against others in the marketplace that use advanced algorithms to make buy and sell decisions instantly. These algorithms can also detect shif🍷ts in the market that Jane is ওunable to see with the naked eye. The automated traders have a huge information advantage as well as better execution compared to Jane.

Investopedia does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Investing involves risk, including the possible loss of principal.