System Trading Vs Discretionary Trading.

[vipin.kumar05]

Hi all,

I dont know whether this thread has been covered or not. But i wanted to know people's opinion of Mechanical trading Vs Discretionary Trading.

Just to be clear, Mechanical Trading is following the signals of a system and discretionary Trading is where you put your discretion in each trade.

What you guys think? Any hardcore system trader out there? Not asking for the rules of the system but about your view of the philosophy of system trading.

Tata.

 

[AW10]

In my view, the journey to trading expertise is like a circle.
1) We all start with few big wins as novice trader and think that we have cracked the code to making millions in the market. At this stage we are into discretionary trading.
2) After getting beating from market, blowing our account, then we realised that we were wrong. That’s when we start to learn trading, develop our rules and keep beating us to implement the discipline of following those rules. That’s when mechanical trading seems like the only way to go.
3) Very few people can come to this level where their mechanical trading rules have become second nature to them. With experience and consistent practice, they have become gain the mastery on trading. They have experience and survived (and in many cases, come out as winner) in different market condition. They have gained such a fine control on trading that they can adjust their action by the hint of their sixth sense when required. They know when to follow their system and when to skip the signal. That’s when they can adopt discretionary trading. The difference between stage 1 and 3, knowledge, experience, traders mindset, right trading psychology and lots of practice.
Traders at this level still have their ground rules but they don’t have to refer a rulebook because it is ingrained their system. At this stage, trader can see what others can’t see and they trade ahead of crowd. They develop contrarian trading methods.

Without going thru stage 2 of Mechanical trading, it is difficult to reach stage 3.
One can easily compare this journey to the way we learn driving right from LL stage till advance stage or learning to swim.
It is difficult to break the rules until you have mastered the rules first. It is true in any profession. For example take the expert musician and see how they create new Raag or music by breaking the basic rules / how sportsman innovate new shots by breaking the basic shot.

So, in short, IMO, it is never either Mech trading or Discretionary trading but mix of both.

Happy Trading.

 

[vipin.kumar05]

In my view, the journey to trading expertise is like a circle.
1) We all start with few big wins as novice trader and think that we have cracked the code to making millions in the market. At this stage we are into discretionary trading.
2) After getting beating from market, blowing our account, then we realised that we were wrong. Thats when we start to learn trading, develop our rules and keep beating us to implement the discipline of following those rules. Thats when mechanical trading seems like the only way to go.
3) Very few people can come to this level where their mechanical trading rules have become second nature to them. With experience and consistent practice, they have become gain the mastery on trading. They have experience and survived (and in many cases, come out as winner) in different market condition. They have gained such a fine control on trading that they can adjust their action by the hint of their sixth sense when required. They know when to follow their system and when to skip the signal. Thats when they can adopt discretionary trading. The difference between stage 1 and 3, knowledge, experience, traders mindset, right trading psychology and lots of practice.
Traders at this level still have their ground rules but they dont have to refer a rulebook because it is ingrained their system. At this stage, trader can see what others cant see and they trade ahead of crowd. They develop contrarian trading methods.

Without going thru stage 2 of Mechanical trading, it is difficult to reach stage 3.
One can easily compare this journey to the way we learn driving right from LL stage till advance stage or learning to swim.
It is difficult to break the rules until you have mastered the rules first. It is true in any profession. For example take the expert musician and see how they create new Raag or music by breaking the basic rules / how sportsman innovate new shots by breaking the basic shot.

So, in short, IMO, it is never either Mech trading or Discretionary trading but mix of both.

Happy Trading.

So basically, like all things in life trading is also neither here nor there. I mean, most of the things in life falls in grey area and i guess same is true about trading also.