Hybrid Forex Trading: Is it the Right Route to Trading?
Gone are the days when you had to buy currencies from your banker physically. Currency trading has since come a long way, propelled by the technology boom, increasing accessibility to the masses through scores of virtual platforms. These can be classified into two different spectrums: Manual Trading and Automated Trading. The former is purely based on a discretionary approach, relying solely on the trader’s decisions, while the latter is mechanical and trusts software that reads the market to drive decisions.
Between the two polarized ends is a middle ground, one that’s often unexplored by Forex traders in Pakistan — hybrid trading.
What is it?
A hybrid approach combines the best of both worlds, empowering traders who aren’t entirely comfortable with automation or get carried away while deploying a discretionary approach.
Challenges involved in automated and manual trading
An automated system depends on price based market indicators and other signals to determine valid entry and exit points in the trade. On the upside, this eliminates the psychological aspect of trading, however, on the downside, the system might send signals that don’t exactly concur with the market conditions and produce unfavorable results.
Manual trading, on the other hand, entrusts the complete power to the trader. The sole decision of taking trades is based on the trader’s strategy, analysis or risk sentiment. While making smart moves does have a positive result, sometimes, the trader might get swayed by emotions, resulting in an unfavorable outcome.
How is a hybrid trading system better?
Finding the optimal balance between the Manual and Automated spectrum and opting for a hybrid Forex trading system can overcome the challenges involved. The significant advantage of this system is that it combines the trading rules of an automated system and the discretionary decisions made by the trader that is based on dominant market characteristics, economic events, and other factors.
By deploying this method as a part of the Forex trading strategy, traders can make more sensible decisions. It allows them to leverage the insightful system signals, while at the same time, equipping them with the power to override them based on the market conditions.
A few advantages include:
• Keeps emotions in check
• Eliminates wrong decisions due to improper system signals
• Automates a part of the process
• Decisions can be adapted to the market condition
• Assists in avoiding possible losses
It is always advisable to seek the help of professionals, to increase your probability of making good decisions and enhance your chances of success in the market. Gain knowledge on hybrid trading and get the required tools with WesternFX, one of the best Forex brokers in Pakistan. Open an online Forex trading account today!