• Automated System Trading
• Difference of “Repeat” and “Program” types
• Automated Trading or Discretionary Trading?
  1. Automated Trading is recommended if…
     1. You are a complete FX beginner
     2. You are busy with work and do not have much time
     3. You are not looking for explosive profits
     4. You are aware of mental weakness
  2. Discretionary trading is recommended if…
     1. You have some knowledge of investment
     2. You can spend a lot of time
     3. You want to increase funds in the future
     4. You have excellent reflexes
• Common failures of automatic trading
  1. Sloppy Money Management
  2. Too greedy for profit
  3. Didn’t stop the automatic trading with bad condition

Automated System Trading

There are two major types of FX trading methods which are automatic trading and discretionary trading, and automatic trading is further divided into two methods which are repeat type and program type.

Thus, even if it is called automatic trading, there is no single way to do it.

Automated trading tools range from existing systems for automatic trading to those that can use your own strategy.

In this article, we will introduce automatic trading and discretionary trading, and who is recommended to use ZuluTrade’s automatic trading tools.

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Difference of “Repeat” and “Program” types

To start with, there are following 5 things which “Automated Trading System” is capable of and incapable of.

1. Building a trading strategy
2. Placing Buy and sell orders
3. Environmental awareness
4. Account balance management
5. Judgment of operation suspension

The above list is a summary of the decisions and operations necessary to make a trade, whether it is the responsibility of the individual investor or is done automatically.

Discretionary trading, of course, is entirely done by the investor himself.

In the repeat trading system, the investors must be responsible for environmental awareness.

Although there are differences between repeat type and program type, there are many things that an investor must decide and execute even in automatic trading.

It is true that automatic trading is automated, but first of all, please be aware that there are many things that humans have to do.

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1. Building a trading strategy
   First of all, you have to decide what kind of rules to trade. Of course, investors have to do discretionary trading, but in automatic trading, this part is decided from the beginning.
2. Environmental awareness
   To hold or close a position, you have to determine what the current market is like. In the case of a trend market, you would buy and sell the positions by following the trend. Investors are responsible for this kind of environmental awareness in repeat-type automated trading. On the other hand, in the case of programs, environmental awareness is also programmed.
3. Execution of trading
   Automatic trading is the process of automating the actual selling and buying. So with ZuluTrade, you do not need to execute trades by yourself.
4. Account balance management
   It is a decision of how much position to hold and how much risk to take with respect to the total funds. Of course, it is very important for discretionary trading, but for automatic trading, cash management is just as important.
5. Judgment of operation suspension
   Of course, only humans can decide that it is better to stop because there is a problem with the method or it is not suitable for this market right now. This is the same for discretionary trading and automatic trading.

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Automated Trading or Discretionary Trading

FX is a free investment product.

It is possible to trade almost 24 hours on weekdays, which is why there are various trading styles.

However, there is no inherent advantage or disadvantage in the trading style.

For example, there is no such thing as “Which is better for scalping or swing trading?” but it is important to choose a method that is easy for investors to do.

This is the same for discretionary trading and automated trading, and no one can decide which one is better.

Choose the one that suits you best depending on the your own financial resources, physical strength, target profit, living environment, and investment experience.

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Automated Trading is recommended if…

1. You are a complete FX beginner

Making a profit in trading requires studying trading strategies.

However, since automatic trading has a trading strategy and stop losses according to the rules from the beginning, the speed at which a complete beginner can trade above a certain level is faster than discretionary trading.

2. You are busy with work and do not have much time

The automated trading literally does the trading automatically, so it is suitable for those who can not check the market frequently.

Of course, there are some things that investors must do and decide in automatic trading as well, but it is not necessary to do it in real time according to market movements.

3. You are not looking for explosive profits

As a trend, discretionary trades tend to be more likely to win than automatic trading.

Matching irregular timing with discretionary trading methods can lead to significant profits that cannot be achieved through automated trading.

On the other hand, automatic trading can be done only as programmed in advance, so it is difficult to deal with unexpected situations, and make some extraordinary profits.

On the contrary, if you want to increase profit without looking for big opportunities, automatic trading will be suitable.

4. You are aware of mental weakness

There are a number of situations in which Forex trading has a mental load.

Especially in settlement, it is inevitable to completely avoid the psychological pressure of take profit and stop loss.

However, in the case of automatic trading, since it is only traded gently according to the rules, even if the mentality is weak, it does not affect the behavior.

ZuluTrade’s service recommended to use through AAAFX’s account for the maximum efficiency.

For more information about AAAFX’s ZuluTrade service, visit the page here.

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Discretionary trading is recommended if…

1. You have some knowledge of investment

In discretionary trading, investors make all decisions regarding trading, so knowledge of FX in general is essential.

2. You can spend a lot of time

In discretionary trading, flexible response to market movements and immediate action are important.

Even if you don’t have to devote all your life time to monitoring charts, people who can spend a lot of time have more advantages and more choices.

3. You want to increase funds in the future

Being stable and profitable in discretionary trading requires a long period of training and lots of experience.

Therefore, there are many people who are frustrated on the way, but if you physically learn how to trade your own way, you can see the way to aim for profit that exceeds automatic trading.

4. You have excellent reflexes

Physical ability is required as a skill limited to short-term trading (scalping).

It can be said that having a reflex is advantageous in order to make a trade while making an instant judgment on a moving chart.

However, this is a case limited to scalping and is not relevant to medium- to long-term trading.

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Common failures of automatic trading

As we have already written, automatic trading also makes it difficult to make a profit if you make a mistake in “what humans must do”.

Remember that trading is automatic, but management is a human task.

1. Sloppy Money Management

The fund management of automatic trading is based on the maximum risk of the operation currently undergoing.

For automated trading systems, investors consider the maximum unrealized loss when all orders within the working range are executed as the maximum risk, assuming that the price does not deviate so easily outside the working range.

Draw-down is the difference between the highest peak and the deepest valley in the profit and loss graph, and the same thing will happen because the amount of assets has decreased so much in the past.

If you do not worry about such risks that you know in advance and operate as you want with a high risk, the possibility that you will not be able to maintain your account will increase.

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2. Too greedy for profit

“Being too greedy” is the same problem as money management.

For automated trading systems, the larger the lot you trade, the more profit you can get.

However, the loss when losing is just as great.

It’s fine as long as the operation is high-risk and you are in good shape, but in the event of a market crash that causes draw-downs or sudden changes, you may incur damage that cannot be recovered.

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3. Didn’t stop the automatic trading with bad condition

You can buy and sell automatic trading only according to the program that has been decided from the beginning for good or bad.

Therefore, if the trading rules do not match the current market price, you may continue to lose money for a long time.

This kind of prosperity is common in programs, but the decision not to trade is a human task.

There is no automatic trading that can handle any market, so always check the results.