If you knew what you knew now but had the choice of choosing at the beginning of you trading career the path of being a Mechanical Trader or Discretionary Trader what path would you choose????????
Mechanical or Discretionary????????
- Thread starter StockOperator
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I don't quite understand the wording of your question but, anyways, I am discretionary with a mechanical (rules-based) backdrop i.e. I adapt according to my perceptions, I don't follow my rules in a totally rigid manner... its kinda always been this way for me...
For the last 2 years I have used various mechanical systems with a discretionary overlay. The idea was to use my experience and intuition by keeping abreast of current events and sentiment to only take the system trades that I felt would work.
I'm up around 100% of the last 2 years. But if I had just taken every single trade with no intervention, I would have made multiples of that and would probably be shopping for a ferrari around now.
So now I have dropped the discretion and take every single trade which is hard sometimes. But my experience has shown that the trades that look the least likely of working and are the most difficult to put on, often turn out to be the best ones.
I am not bagging discretionary traders because I know of some really great ones (who actually got me started on the hybrid style in the first place), but I have discovered my real strength is developing robust systems so that is where I am focussing my energy on now, rather than trying to be fancy and 'beat my system' with discretionary tactics.
I'm up around 100% of the last 2 years. But if I had just taken every single trade with no intervention, I would have made multiples of that and would probably be shopping for a ferrari around now.
So now I have dropped the discretion and take every single trade which is hard sometimes. But my experience has shown that the trades that look the least likely of working and are the most difficult to put on, often turn out to be the best ones.
I am not bagging discretionary traders because I know of some really great ones (who actually got me started on the hybrid style in the first place), but I have discovered my real strength is developing robust systems so that is where I am focussing my energy on now, rather than trying to be fancy and 'beat my system' with discretionary tactics.
Mechanical, some say if you are a discretionary trader you can manage to avoid a few mistakes sometimes, which i completelly agree with. But, when you use discretion, you also miss out on a lot of good opportunities as well. The point is, if you strart using discretion, you are deviating from your own system. When you are wrong using your system, you are only paying the price for doing business.
Thats it, your paying a price for doing business. You are bound to be wrong, nothing works all the time.
Thats it, your paying a price for doing business. You are bound to be wrong, nothing works all the time.
Great point!! I completelly agree.