Dumb Questions From a Noob

[Robert Morse]

I agree, but a trader or data expert told the Algo what to do. To me, it is very similar.

Definitions will vary on this point. To me discretionary trading isn't really about "feel" vs rules, but whether humans are involved in the trade decision loop. If you have an algo(s) which makes all the decisions from trade identification to entry, management, and exit, that is systematic or algo trading. If you as the trader are responsible for those decisions, that's discretionary. I'd venture that all successful discretionary traders have large bodies of rules they follow, the discretion is in how they are applied to a specific situation... and also knowing when to break the rules.

 

[Scataphagos]

Can someone explain to me in plain English what the difference is between RSI and RS? I’ve always looked at RS, from what I’ve gleaned reading IBD. But I don’t recall IBD ever mentioning RSI. And yet I see traders (one that I subscribe to his service) use RSI all the time.

They are more different than their names sound.

RS, "Relative Strength"... is the measure of one issue vs. another. Example... if the Nas goes up 3% while the SP goes up 2%, the Nas has shown greater "relative strength" vs the SP.

RSI, "Relative Strength Index"... is a technical tool that shows where an issue is currently vs. a certain number of recent days... 14 days/bars is the stock default. Think of it as a form of "overbought/oversold oscillator". Similar to other "range indicators".

 

[themickey]

My interpretation of discretionary.
Firstly, I'm a rule based, algo, fundamental, technical, discretionary trader, I use all five simultaneously.
The discretionary part; although my rules and algos may direct me, ultimately I decide from experience and market conditions, whether to trade and what to trade.

Computers and rules are fine because they funnel you quickly to a decision, but they are not enough to capture all the information floating about.

For some, they will trade straight off a computer based signal, for me, accuracy is more important than quantity, so my brain brings in checks and balances.

 

[TheDawn]

What is “discretionary trading”? Before I retired, as a financial advisor, it meant to me, I had discretion and managed accounts without the ok from the client in each trade.

but I’m guessing it means something different here. Is it trading in gut feel, as opposed to rules based trading? That’s my guess, but I’d be surprised if that’s actually a thing among professional traders.

To me a "discretionary trading" is making a trading decision manually vs. programming a trading plan/system/decisions in various scenarios into a software program and running the program to trade automatically. You trade at your discretion and not by a set software.

 

[schizo]

To me a "discretionary trading" is making a trading decision manually vs. programming a trading plan/system/decisions in various scenarios into a software program and running the program to trade automatically. You trade at your discretion and not by a set software.

Discretionary trader

System trader