What is at your discretion?

[braincell]

Quote from Lucias:

Lol... the crap that spouts for advice on this forum. I 100% disagree with braincell. The mix of discretionary/rule-based models that traders can use are virtually unlimited.





I've found these decisions very worthwhile:

* Confidence based betting, i.e betting more when I'm more confident within LIMITS
* Predicting direction

So what you really want to do is focus in on the decisions that you think will produce the greatest benefit versus those that are just going to zap your energy without producing a result.

ok well you do it your way. discretionary guys introduce the randomness that my algos need and thrive on. i can't be bothered looking up that article where barclays gave statistics on how it's discretionary trading division performed compared to their algo division. it was something like a total of 15M for discretionary vs 400M for algos. the other articles outlining stories of traders who survived the long run all abound with traders that behaved like automatons and tried to mimic algos because they couldn't interpret or code one themselves.

you say "decisions that you think". ok so you think that based on what? looking at your favourite indicators? can you combine the outputs and detect mathematical regularities within the combination of your indicators as well as a machine can? can you seriously look at lines on the screen and make measurements more precise than a machine? maybe if you change the indicator colour lines the contrast will change and to your eye they might seem to diverge more, etc etc. if you don't use indicators on the screen then you are using them in your head. you are trying to create a thinking process you don't really understand. why? because you need to trade for years to have 100s or 1000s of trades to know if your subconscious system even works and if the standard deviation of the rules is acceptable. a computer on the other hand can tell it to you straight - what works and what doesn't and for how long. trying to "figure it out" in real time as a human automaton takes a huge amount of time. it takes less time to learn coding, read a few books on indicators, and code your own strategy around an API. it takes less time, it really does. i'm just trying to help here.

 

[braincell]

Quote from Chris_Anonymous:

Braincell, do you mean the trader is eventually functioning as an algo? See this is also how I tend to view the whole process. Ideally, I'm attempting to trade a working and tested plan, and therefore eliminate the discretionary pieces. This is why I asked this question. What is the discretionary part to trading? I suspect "discretionary" refers more to the fact that the trader is not using an automated trading system.

yeah, like i said in my post above, i feel that for you to know that your system is working you have to trade it live and trade it through all sorts of market conditions. for that to happen you might need a whole year to have any kind of statistical significance for it going forward. that's just a whole lot of time. and any time you change your rule, the statistical significance of your testing the system is reset to 0. maybe you can test it more by replaying charts on the weekends, but it's still quite slow. the most credible stories and the most numerous of discretionary traders being successful are those that learned to trade like machines.

 

[Chris_Anonymous]

In case it helps any, one of my "ET Mentors" has provided me with a great description of discretion and how it applies to the trader.

"In my book, discretionary trading by and large means trading from your experience/intuition. Therefore, for those who have limited to no market experience, discretionary trading is not possible. For most newbies, intuition is really spelled "into-wishin". This is because they really haven't built up a storehouse of viable experiences as yet. Further, discretionary trading is not a method in and of itself, it is a technique that is applied to a method. So that means that the trader still trades his verified and validated method as designed, and then occasionally applies discretion where he sees applicability. As a few examples in my case, I will use discretion:

1. When my signal appears but there is a major report, major meeting, or controversial speech due in a few moments.

2. When a signal generated by my method is just on or beyond the borderline of my TP risk profile.

3. When I'm not physically feeling up to par, even though the signals are there on my screen.

4. When my experience/intuition tells me that there is a 1-in-1000 low risk play afoot, even though the signal is not officially codified in my plan.

As Douglas says, for the trader who truly trusts himself beyond a shadow of a doubt, trading rules really aren't necessary. This is because he has become "the method". In my book, discretionary trading is a function of confidence in my method, my skills, and my capabilities, trust in my assurance that I will protect myself in all contingencies, and a willingness to push myself beyond my comfort zone every once in a while. This insures that I'm always creating new opportunities to learn and grow.

Hope this gives you some food for thought."

 

[oldtime]

Quote from Chris_Anonymous:

In case it helps any, one of my "ET Mentors" has provided me with a great description of discretion and how it applies to the trader.

"In my book, discretionary trading by and large means trading from your experience/intuition. Therefore, for those who have limited to no market experience, discretionary trading is not possible. For most newbies, intuition is really spelled "into-wishin". This is because they really haven't built up a storehouse of viable experiences as yet. Further, discretionary trading is not a method in and of itself, it is a technique that is applied to a method. So that means that the trader still trades his verified and validated method as designed, and then occasionally applies discretion where he sees applicability. As a few examples in my case, I will use discretion:

1. When my signal appears but there is a major report, major meeting, or controversial speech due in a few moments.

2. When a signal generated by my method is just on or beyond the borderline of my TP risk profile.

3. When I'm not physically feeling up to par, even though the signals are there on my screen.

4. When my experience/intuition tells me that there is a 1-in-1000 low risk play afoot, even though the signal is not officially codified in my plan.

As Douglas says, for the trader who truly trusts himself beyond a shadow of a doubt, trading rules really aren't necessary. This is because he has become "the method". In my book, discretionary trading is a function of confidence in my method, my skills, and my capabilities, trust in my assurance that I will protect myself in all contingencies, and a willingness to push myself beyond my comfort zone every once in a while. This insures that I'm always creating new opportunities to learn and grow.

Hope this gives you some food for thought."

and that's why the traders with the most experience are the most successful?

A recent study showed that 30% of all lottery winners bought tickets on a consistent basis. (just something to think about.)

Like the Messiah said, "Luck, skill and trust. Of these three the greatest is trust."

I can't tell you how many times I have been stopped out only to see the market affirm my original assumption. If only I had trusted myself it's hard to imagine how rich I would be.

Out where I live they play with rattlesnakes because they know if you trust, nothing can hurt you.