Discretionary vs fully Systematic

[murray t turtle]

By the way - about the topic of this thread. I am a Day Trader - Yes - there are things that you can do - like having a backup source - but MOST traders do not have that.

I only trade for 2 hours in the morning - NEVER more. In my younger days - I would trade all day - make money early - give some or all back at times or go negative - the longer I traded.

%%
GOOD points+ good time;
for daytrades.
NEVER limit that to 2 hours when doing longer trades, trend trades or investments.
Life's so hard to understand \
why the rich man's busy skippin' \
while the poor man pays the band. T Tritt Song / Lord Have Mercy on the Workin' Man.
[I still like to do chart work by hand\
..........................................+ some farmland\
+ nothing like a good plan/ or greenland/ RymeZone

 

[Redneck]

Hi!

I'm new to ET and this is my first thread. I have no financial background, started trading part time in 2020 and haven't reached consistency yet. I was wondering how you guys decided what kind of trader you want to be?

I started with a buy & hold mindset and realized after a short amount of time that I want to be a more active trader. I currently trade a trend following long intraday/swing strategy with a focus on US growth stocks. My strategy has systematic and discretionary aspects. After marking up charts and manually collecting Data, I'm now taking deep look into backtesting. The goal is to back up my discretionary trading with statistical data over time, so that I can have more conviction in my A+ setups.

I'm kind of blown away with the newly discovered backtesting possibilties and systematic aspects of fully statistically backed edges. I found out that there are traders out there that fully act on a system that practically eliminates all discretionary actions. Some days I find myself fighting at the "borders" of my system and I act more discretionary, sometimes with success, sometimes not. Now I'm a bit torn apart and ask myself if I might be more successful on the systematic side of trading. Did some of you guys undergo a similar process? Did these changes lead to a different mindset in regard to trading? Were you able to fully embrace the systematic approach from the start on? Was it easier to abide your rules, did you discipline improve?

I guess the most logical way to find out would be to trade a fully systematic strategy on a paper account for a few weeks and see how I do & feel. Any other suggestions?

I don't know if there is already a specific thread on this topic but am looking forward to your answers!

Various thoughts

Back testing is fine but be cautious of over optimizing - mkts constantly evolve / morph / change - as does the world


Discretionary vs systematic

Systematic - for it to truly be - it should be able to be programmed (a=c..., then do b) - which works until the mkt morphs.., then will need to re-baselined / modified


Any approach that can't be programmed - by default is discretionary

Optimal discretionary, learn to read price (which is simply a matter of learning a new language) - then simply follow the bouncing ball (while always using a stop loss) - this way is self correcting / adapting - as then mkts morph

Takes work - but then all things worthwhile do

RN

 

[murray t turtle]

There is a difference between discretionary trader with rules and without. Without rules it is called gambling not trading.

%%
Good + practical.
COULD be to easy to do stupid risk[aka stupid like gambling]with out rules.
Even if one could find a system one liked;
takes discretion to do that.
Orange Cover WO'N 444 page book[Make Money ...;Win System is an example of rules+discretion system, even though it's Index patterns+ single stocks.
So with discretion+ rules could use ETFs.
Some use rules with with choice like sell or buy@ 50dma;
+ planned [written]on getting out of SPY today, on hourly charts- had 6 good hourly choices today, its usually not that many good choices LOL.
Got in something I like better.
I did trade some single stocks,2023 but i wanted to beat SPY benchmark by 100%, meaning if JAN SPY did 4% i wanted 8% net.So that's why i dont trade single stocks, may do SSO, it will.

 

[ironchef]

I - ALWAYS - follow my trading rules - win or lose.

Many years ago - when I first started trading - I thought - this should be easy. In the beginning - I was trading Stocks - made a lot of money. I got a little cocky - thinking I was such a damn good trader - it is so easy to make money trading. At first - I traded part-time - kept working - as I really loved the type of work I was doing. Finally - in the early to middle 1990's - I decided to quit work - go full time as a trader. Not long after - I started trading really STUPID - and damn near went out of the trading business. I guess you could say - I thought I was smarter than the market - got a little arrogant - and the market finally showed me - I wasn't even close to being - even a marginally good trader.

Going forward

Well - I had to decide - do I keep trading - or go back to work. As far as going back to work goes - it was a hard decision - because when I left - a damn good job and career - many in the company knew what I was going to do. Hell - would they even give me my job back. Finally - I decided - to make some changes - keep trading.

Without getting to deep into what I did - what I will say is - the type of work I did - was really - based on Rules. The funny and sad thing when I started trading - was I did have some Rules - but some VERY WEAK - and in a way - MEANINGLESS RULES. Excuse my example - but say you Fart - it smells Good - you Buy - if it smells Bad - you Short. So - you might say - basically - my RULES - were really STINKY.

Finally - I stopped trading for a short time - really put some thought into - WHY - I was failing as a trader. The type of work I did in my career - in the Aerospace industry - you couldn't make mistakes - as lives depended on the finished product. If I had done my job - like I did my trading - I am sure - I would have been fired.

E-Book

I better stop - as I am probably already boring the hell out of whoever reads this - so sorry - if you get a headache.

I finally realized - I needed to take trading SERIOUSLY - make some good RULES - then actually FOLLOW THE DAMN RULES. There is a saying - "Rules are make to be Broken" - well - if you have GOOD RULES - and YOU BREAK THEM - you might as well NOT HAVE ANY RULES AT ALL.

Here is an old e-book I put together years ago - hope it helps some traders.

@VSTscalper, thank you for sharing the ebook.

I have friends like you, from aerospace, many applied their skills in engineering to trading but few were successful.

 

[VSTscalper]

@VSTscalper, thank you for sharing the ebook.

I have friends like you, from aerospace, many applied their skills in engineering to trading but few were successful.

ironchef,

Thanks for taking the time to look at the eBook. I hope it helps some traders.

If you or other traders want to come into a Skype or Zoom Room sometime - watch my Algos give the Signals - you are more than welcome. My charts are clean - NO indicators - just the Signals. By the way - although I have my Algos - I personally would NOT let it trade Full Auto - without watching - as there are so many things that can go wrong. I actually Prefer - Discretionary trading the Signals - and I trade a Maximum of 2 hours in the morning - when I trade. Any trader who wants to watch the Signals - if they trade them - do it on Sim - as I do NOT want to be responsible for any Real Money Losses.

There will be absolutely NO sales pitch. The only problem would be having to listen to me - as I tend to Bullshit a lot - probably because I grew up in Montana - worked with a lot of cattle - LOL. It is kind of funny to me - worked on farms and ranches when I grew up - and a lot of kids my age - ended up owning their own farm or ranch. I decided I wanted to get far away from that - no more Bullshit for me - so I became an Engineer in the Aerospace Industry.

By the way - I much prefer Scalping. I grew up on an Indian Reservation - both my Brothers-in-Law - were American Indian - and they showed me the correct way to SCALP - so - you might say - it is in my blood - LOL.

VSTscalper

 

[Redneck]

What is a discretionary rule based trader? Isn't it either/or?

Here some examples

Trading discretionary..., with rules



every trade gets a stop loss simultaneous to entry - no exceptions

stop loss never gets increased - take the damn loss

stop loss gets moved to profit - once / as feasible (seldom do I move to B/E)

never add to a losing position - take the loss / find the next entry

add to positions that are green

in a confirmed uptrend - look for long entries only (pullbacks / breakouts / ect)

same for downtrend

In a range - don't look for new B/Os - trade accordingly (buy the bottom / short the top) - while knowing where traders are placing their stops - duh..., so don't be that guy

enter when it mentally the toughest (holdover from my earlier days - these entries no longer are)

if head up ass / distracted - don't trade - no exceptions

last 15ish minutes before close - no trade (not enough time to recover / dig out if it doesn't work)

each morning - go thru prep before trading - no prep.., no trading..., no exceptions


Trust these examples helps elucidate

RN