Does a Discretionary Trader Change with Market Changes

[SimpleMeLike]

Hello,

Correct me if I am wrong below.

With automated/systematic trading a trader thinks of a profitable trading idea, program it, optimize/back test it, forward test it, then trade it til drawdown is hit. After +100 trading ideas tested, the trader finally finds one that is profitable and the robot trades the strategy til its not profitable any more.

I am bit confused what a discretionary does and how the discretionary trader reached profitability over time. Surely you didn't back test +XXX trading strategies for +5 historical years by hand.

I have the follow questions for discretionary traders:
1. Do you trade a method or strategy manually?
2. Do you just trade based on what you see or feel or have experience with that has made you money and makes you happy.
3. Do you trade multiple methods from years of trading experience?
4. Did you ever back test your method or did you trade daily based on market conditions or what you see on the chart?

I am just curious. The reason I ask is because I think I may better trading day-to-day then program, click back test / optimize, evaluate performance metrics, try another idea, repeat repeat. May be better to trade what I see and control risk. Just thoughts.

Thanks

 

[dozu888]

check my 'trading is easy' thread.... it's like doing theoretical physics... no back test, nothing to prove... you just look for pieces of the puzzle... if they fit together, then you get a hypothesis to trade with.

but nowadays with IBM Debater already beating humans, the 'discretionary' line will be less clearly defined.

 

[CLkiller]

1. Do you trade a method or strategy manually?

Yes

2. Do you just trade based on what you see or feel or have experience with that has made you money and makes you happy.

Yes

3. Do you trade multiple methods from years of trading experience?

Yes

4. Did you ever back test your method or did you trade daily based on market conditions or what you see on the chart?

No. Backtesting is worthless IMO, because past performance is not indicative of future results.

 

[SimpleMeLike]

check my 'trading is easy' thread.... it's like doing theoretical physics... no back test, nothing to prove... you just look for pieces of the puzzle... if they fit together, then you get a hypothesis to trade with.

but nowadays with IBM Debater already beating humans, the 'discretionary' line will be less clearly defined.

Thanks dozu888 for your input.

Explain a bit about "hypothesis to trade".

 

[SimpleMeLike]

Yes


Yes


Yes


No. Backtesting is worthless IMO, because past performance is not indicative of future results.

Thanks for input CLkiller.

When did you realize that how you trade will make consistent money? How did you prove it to yourself?

 

[dozu888]

Thanks dozu888 for your input.

Explain a bit about "hypothesis to trade".

examples in my thread.

 

[dozu888]

Thanks for input CLkiller.

When did you realize that how you trade will make consistent money? How did you prove it to yourself?

how does a champion poker player know he will win... because he has been winning, by reading others' cards better than they his.

if you get there, you will know.

 

[SimpleMeLike]

examples in my thread.

Thanks, I will read over your thread.

 

[fan27]

No. Backtesting is worthless IMO, because past performance is not indicative of future results.

Whether you are an algorithmic trader relying on backtests or a discretionary trader, you are still relying on what you know about PAST cause and effect relationships to make buying/selling decisions. If a man has smoked a pack of cigarettes a day for the past 10 years, I will place a very large bet that he will smoke a pack tomorrow. Same with markets to a certain extent. Market participants tend to repeat behaviors which can be measured and taken advantage of.

 

[fordewind]

A discretionary trader becomes profitable over time by finding a niche.E.g., pump an dump by Sykes;Failed BO by Gerchik and so forth...