AI vs Manual Crypto Trading: What’s the Difference?
Manual and AI crypto trading, a.k.a automated trading, have their own rewards. Manual trading requires rational and well-thought-out personal decision-making, whereas algorithmic trading is exempt from emotions. By understanding the core differences between manual and AI trading, traders can select the approach that best aligns with their strategy, expertise, and desired level of market engagement.
Let’s explore the methods closer to help you choose the best option for your needs.
Automated Trading
Automated, or algorithmic, trading uses specialized programs that execute pre-set commands and rules for entering or exiting trades. Tasks such as opening orders, stopping losses, and more are combined with technical analysis.
AI monitors the market continuously, requiring no human intervention once the rules are set.
Manual Trading
Manual trading involves making personal decisions for buying and selling, so it requires you to closely monitor the markets in real-time. In manual trading, you — not AI — are responsible for each operation.
Differences Between Manual and Automated Trading
Several factors differentiate these two trading styles. Let’s review the main aspects to determine which suits you better.
Emotional Factor
- Algorithmic trading is free from human biases like excitement, greed, fear, or impatience, reducing the risk of errors due to emotional influence.
- Manual trading can be influenced by emotions, which may lead to premature decisions when feelings like fear or greed override data and facts.
Time Factor
- Algorithmic trading saves time since machines can process data and execute calculations faster than humans. What might take hours for a person, AI can accomplish in milliseconds.
- Manual trading is more time-intensive, involving tasks like price movement analysis, market review, and order placement.
Testing Factor
- Algorithmic trading allows for automated testing, enabling AI to compare historical and current data to refine strategies.
- In manual trading, you analyze past and present market data yourself, determining effective strategies and adjusting as needed.
Order Execution Volume
- Algorithmic trading can handle multiple orders simultaneously, trading across various assets and accounts and across multiple markets.
- Manual trading is slower, as even experienced traders cannot match the speed of AI.
Control Factor
- Algorithmic trading uses pre-set rules and requires minimal ongoing control, though you can update commands if necessary.
- Manual trading requires active, real-time oversight, allowing traders to adjust stop-loss or take-profit orders at any moment.
Conclusion
Both methods offer unique advantages and challenges, and the choice between them often comes down to individual trading goals, risk tolerance, and experience. Manual trading is a traditional approach that requires personal analysis and decision-making at each step, often suited for those who prefer direct control and involvement. In contrast, AI or algorithmic trading leverages pre-set commands and advanced algorithms to execute trades without the influence of human emotion, making it an appealing choice for those seeking efficiency and reduced emotional interference. Whether you’re a beginner exploring the basics or an experienced trader honing complex strategies, balancing the advantages of both manual and AI-driven trading can help you navigate the fast-paced world of cryptocurrency with confidence.