It's not a question of whether EAs or discretion is superior
“EA is better because it is not influenced by emotions,” “no, discretionary trading can adapt to market changes.” In FX discussions, there is often debate about which is superior: EAs (automatic trading) or discretionary trading.
As I continue to develop and test indicators, auxiliary tools, and EA development, I feel this question is more useful to consider as “what is each good at?” rather than “which is better.”
What EAs are good at
- They follow rules: They make decisions in the same way every time under the set conditions
- They can monitor for long periods: They can operate even at night or during work if the conditions are met
- They are easy to verify: Since the rules are clear, you can test them with historical data
- They are not swayed by emotions: Even after a losing streak, they won’t change the rules on their own
What EAs struggle with
- Unforeseen market situations: They cannot handle markets not described by the rules
- Changes in market characteristics: Even when the market favorable to them ends, they keep moving with the same rules
- Impact of the operating environment: Results can change depending on computers, communications, and brokerage conditions
What discretionary trading is good at
- Judgment suited to the situation: You can observe news and market mood and refrain from trading
- Flexibility: By watching price movements in the moment, you can change entry and exit approaches
What discretionary trading is weak at
- Maintaining rules consistently: Judgment can become unstable after a losing streak or big profits
- Long hours of monitoring: People cannot stare at charts all the time
- Difficulty in verification: If parts of the judgment are vague, it’s hard to test them the same way with historical data
A concept of combining them
EAs and discretionary trading are not choosing one over the other; they can be combined.
- Have discretionary judgments assess market conditions, and decide when to start and stop the EA
- Let tools handle the parts of discretionary trading that can be systematized (checklists and calculations)
- Look at EA performance to identify characteristics of weak markets and use that as input for discretionary decisions
For example, tasks like pre-entry checks and redraws of lines—“fixed tasks”—are easy to hand over to tools. Humans make the judgments, while tools assist with tasks.
Cautions
Whether using EA or discretionary methods, success depends on the substance. Do not simply lump “EA = safe” or “discretion = flexible”; instead, determine whether the method fits you.
As a research institute
Usagi-sensei MT5 Research Institute continues to develop tools to assist discretionary trading and to study and verify EAs. Rather than deciding one as good or bad, we aim to create tools that leverage the strengths of each.