While automated trading does offer a lot of advantages, old-fashioned manual trading is still not thrown out of the window completely. Sometime in the future, who knows, that may happen as well.
Making the right trading decisions consistently requires gathering a lot of information and then processing that information with the trader’s knowledge and through his skills.
In this regard, a lot of technical trading systems will have a period when they perform very well and then after some time, the system will hit a period of drawdown which is basically a series of losing trades. In some cases, the system may not at all return to profitability. This is one of the bigger problems with pure technical systems both manual and automated.
Usually, the way professional traders do it is they will analyze the underlying factors like fundamentals and the geopolitical situation of a country or currency, and then they will base their investment decisions on the conclusions of this analysis. Institutional traders usually use technical analysis only to find good price levels at which to buy or sell a currency pair and not to decide the long-term direction it will move in.
When appropriate they will take full advantage of automated trading to further enhance their profits.
Automated trading really shines in very short-term trading where anyway the trader will need to make fast decisions based on a few indicators. The difference is the human trader will be under huge psychological pressure and executing everything well can be difficult while on the other hand the trading robot has no problem in executing every step of the trading plan.
For example, we all know that a human has limited resources when it comes to the number of things we can keep in our head at any one time, and monitoring a lot of trading indicators and different markets at the same time is impossible to be done perfectly. An automated system takes care of all that and it will monitor as many indicators and markets as it was programmed to.
Keep in mind, though, that doesn’t mean that the robot should not be monitored regularly. In fact, it is even better if the trader has a thorough understanding of the foreign exchange market and knows his trading system well, so he can get maximum benefits from using an automated trading robot.
In essence, an automated trading system will tend to do better than manual trading in pure technical systems for short term sentiment driven moves. However for the longer term trends in currencies where fundamentals are a big factor, a human being needs to process all the information and make a prudent decision based on it.