Comments on: The difference between discretionary and system traders http://www.theessentialsoftrading.com/Blog/index.php/2008/12/18/the-difference-between-discretionary-and-system-traders/ Information and resources for those looking to learn about trading and the markets Fri, 03 Sep 2010 11:58:19 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: David http://www.theessentialsoftrading.com/Blog/index.php/2008/12/18/the-difference-between-discretionary-and-system-traders/#comment-13216 David Thu, 18 Dec 2008 17:26:26 +0000 http://www.theessentialsoftrading.com/Blog/?p=747#comment-13216 We just can't live in a world of labels - certainly in a world defined by just one or the other. The video demonstrates (toward the end of the 5 minutes) the thinking going into the manual mode to exit the positions. It's a messy world out there, but your trading benefits if you can have an assortment of tools (certainly ones that leverage you into multiple persons trading opportunities that no 1 person could in a risk managed environment). To get to this ability in your trading (as you well know) you've got to stop holding a hammer and looking at the world as if it were full of nails. Great, thought-provoking article! We just can’t live in a world of labels – certainly in a world defined by just one or the other. The video demonstrates (toward the end of the 5 minutes) the thinking going into the manual mode to exit the positions. It’s a messy world out there, but your trading benefits if you can have an assortment of tools (certainly ones that leverage you into multiple persons trading opportunities that no 1 person could in a risk managed environment).

To get to this ability in your trading (as you well know) you’ve got to stop holding a hammer and looking at the world as if it were full of nails.

Great, thought-provoking article!

]]> By: John http://www.theessentialsoftrading.com/Blog/index.php/2008/12/18/the-difference-between-discretionary-and-system-traders/#comment-13213 John Thu, 18 Dec 2008 16:02:30 +0000 http://www.theessentialsoftrading.com/Blog/?p=747#comment-13213 David - I was hoping someone would pitch in on a split approach. :-) Actually, one could make the argument that if there's any discretion at all then one isn't really doing system trading, but I think that's probably a bit too semantical. To your example, though, being a part system trader does strike me as having some risks. If the idea is to take the emotional element out of things (as many traders claim) then having a non-systematic element involved (like the discretionary exit you mentioned) rather defeats the purpose. David – I was hoping someone would pitch in on a split approach. :-)

Actually, one could make the argument that if there’s any discretion at all then one isn’t really doing system trading, but I think that’s probably a bit too semantical. To your example, though, being a part system trader does strike me as having some risks. If the idea is to take the emotional element out of things (as many traders claim) then having a non-systematic element involved (like the discretionary exit you mentioned) rather defeats the purpose.

]]> By: David http://www.theessentialsoftrading.com/Blog/index.php/2008/12/18/the-difference-between-discretionary-and-system-traders/#comment-13212 David Thu, 18 Dec 2008 15:02:51 +0000 http://www.theessentialsoftrading.com/Blog/?p=747#comment-13212 What about those traders who employ a hybrid of these two camps? I mention this possibility because several of our subscribers who are automating their trading strategies watch what these bots are doing and, at their descretion, will flatten their positions (or choose to double it) in such automated strategies at the click of 1 button. Often automation or system trading will initiate the entry decision (the scanner identifies an opportunity, the pattern the tool is scanning for has been sufficiently backtested as to show a discernible, high probability of success, and the automation initiates the trade) and the trader will then either let the automated trading rules perform the exit or decide him/herself to exit the position. See a 5 minute video that demonstrates this hybrid approach using the suite of trading tools from Trade-Ideas: http://www.youtube.com/watch?v=RHmgepmICec&feature=channel What about those traders who employ a hybrid of these two camps? I mention this possibility because several of our subscribers who are automating their trading strategies watch what these bots are doing and, at their descretion, will flatten their positions (or choose to double it) in such automated strategies at the click of 1 button.

Often automation or system trading will initiate the entry decision (the scanner identifies an opportunity, the pattern the tool is scanning for has been sufficiently backtested as to show a discernible, high probability of success, and the automation initiates the trade) and the trader will then either let the automated trading rules perform the exit or decide him/herself to exit the position.

See a 5 minute video that demonstrates this hybrid approach using the suite of trading tools from Trade-Ideas: http://www.youtube.com/watch?v=RHmgepmICec&feature=channel

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