Discretionary Versus Mechanical Trader
by Trader Rich
I can’t tell you how many times I’ve flipped-flopped on the question of whether discretion is needed in my trading. Throughout the last three years, I’ve gone from stating that discretionary trading is a necessary component in my trading repertoire to stating that "
Once again, I am stating for the record that discretionary trading is not for me. I believe in a very limited amount of discretion in my trading but generally, I really think it’s in my best interest to stick with systematic/mechanical trading. It creates a sense of order in the market for me when there is none. When I make a discretionary trade, I immediately become uncertain and doubtful that I did the right thing. This always turns out bad for me. I’ll save discretion for determining things like current trend but for entries, exits, stop losses, profit targets, and position sizing, I think I’m much better off being systematic. I also think that my educational background confirms this. My background is in computer science and automating/programming repetitive tasks has been common practice in my career.
I told myself when 2008 began that I was going to be trade strictly systematic in January. So far, it’s paid off and I have not strayed from this. My account balance is currently up 13% in January.
How do you know if you’re better suited to discretionary or mechanical trading? I think that as your experience level progresses, you’ll just know.