What Is Manual Trading And How Does It Work?

Sep 29, 2022 By Triston Martin

Manual trading may be for you if you've ever wanted to trade on the financial markets with your own money and entirely under your control. It allows you to buy and sell anything from stocks, bonds, gold, or bitcoin at your discretion.

However, a few drawbacks come with this type of trading. Below, we summarize manual trading.

What Is Manual Trading?

Manual trading is an investment technique in which the trader trades for themselves without having a brokerage account. Engaging in this type of trading style makes it possible to invest in both stocks and bonds.

Many bypass traditional trading methods and invest simply through paper or computer stock certificates. It is also a great way to learn how to trade, learn the market, and place your trades at their best advantage.

The key to manual trading is opening an account with a brokerage firm that allows you to trade directly with the company's representative.

This type of brokerage account allows you to hold stocks in what is called an account-based portfolio.

Through this type of account, you can make trades whenever you want, without using a brokerage statement provided every morning by your broker. This option is much less expensive than using a traditional brokerage.

How does Manual Trading work?

Manual trading works by you selecting which stocks or other financial instruments to trade. You can either choose one stock or a basket of stocks which meet your investment criteria.

You'll then decide how much capital to allocate to each trade, either as a percentage of your account or in dollar terms. Again, if you're using manual trading as a hedge against broad economic fluctuations then you'll want to invest more money in large-cap stocks.

Once you've decided on which and how many securities to buy and at what price, the trade goes through and the securities are bought according to your instructions. If the market moves adversely during this period, you can adjust the price at which you will buy the security.

You can manually trade at any time during the trading session. The benefit of trading in the pre-market and after-hours sessions is that you can get a jump on the rest of the market while they are still sleeping.

The more time you take to research your trades, and make decisions about how much capital to invest in different stocks or tokens, the better your chances will be of realizing a profit from your manual trading activity.

With manual trading, it can be easy to forget about your position for hours or even days at a time. If this is the case, it probably makes more sense for you to use automated trading instead of manual trading. The more time you take to manually trade, the greater your chances are of making a bad decision and losing money.

Even with manual trading, you can make a profit without executing any trades. While this won't happen very often, if you know that a specific stock is going higher in price, then it can be easier to just buy options on that security rather than make the actual trade.

This way if the stock goes up, you'll make extra money on your investment, and if it doesn't move, then you won't lose anything.

Manual Trading Example

As an example, let's say that you have $50,000 to invest in stocks and stocks are trading at $100 a share. Therefore you're looking at a target profit of $10,000.

Let's say that you'll use 20% of your capital to trade 20% of the stocks in your basket. The goal is to use some portion of your capital this way, and it will likely grow over time as you learn about which securities are good for trading and which ones aren't.

Pros Of Manual Trading

Through manual trading, the trader becomes responsible for his or her own money. They take on all of the responsibilities that go along with taking care of your investments.

The responsibility includes monitoring your portfolio, knowing what to sell and when to sell it, managing losses and profits, and making sure that everything you have invested is safe in the case of market crashes.

Cons Of Manual Trading

It is often difficult to decide on price points in stocks or bonds when playing the market manually because it is hard to compare prices against each other when they are not listed on one site.

It can be difficult sometimes to make profitable investments because you do not know what the price point should be. This can be hard to work around if you are already dealing with your own money and you are trying to make the most of it.

Manual trading can also be time-consuming on top of being confusing. It is very time-consuming because you have to keep track of everything in your portfolio, watch for price changes and know at any given moment where each stock or bond that you have invested in is located.

It can also be confusing because manually trading is not like using a machine that does it for you and does not require any additional help from the trader. That being said, manual trading is a great way to become familiar with the market on a deeper level and helps traders better understand how markets work.


Manual trading is also a great way to prepare for the learning curve of automated trading. This can be a good way to get your feet wet in the financial world before investing vast amounts of money into something you are unsure about.

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