What's better, systematic or discretionary?

Take DAX, for instance.It`s going higher, right?

When do you think it ends?According to my gabling-shmambling-rocket science theory it ends at around 13400.Let`s see...
 
Systematic trading is like trying to box the market in to sing the song you have written. IMO. Many times it will work but many times it will not work as the market doesn't know nor really care about one's music or tune.

I prefer to let the market write its own song..sing it's own song..and i sing along. Hence i am a discretionary trader that tries to see what the market is singing and I join in.

This is why so many HTF's are going down the sewer as the market is singing a new song that systematic traders are having a hard time boxing in the lyrics. Look at those that promoted price drivers...ROFLMAO

Anyway, this is one point of view...mine. I never know which song it will sing but once it starts singing I can join in. The market actually doesn't know that many songs. But it can add, and will add, a different twist to the same song, each time it sings it. So i have strategies for the different twists. You can only twist in so many directions.......sometimes there are fake twists...a roll to left when a roll to the right is the real twist intended...but there are ways to detect the veracity of the twists...
 
sle said:
Systematic means that there is a fixed algorithm that either tells you when and what to trade or takes over everything including the execution. As long as your process for coming up with the trade can be expressed as a set of explicit rules it's systematic.


If you are using judgement (e.g. you make a decision not to trade because it feels wrong or something is missing) it's not a systematic strategy. Fundamental analysis actually has been successfully automated, there is a fair number of a fundamental quant funds that do exactly that.


Not really, though. Stops can not be predicted, but they certainly don't break the systematic aspect of the strategy. They just add path dependence.
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Appreciate your comments.
 
d08 said:
Systematic not systemic, different definitions.
Discretionary by definition means you use discretion, while you might or might not have a methodology, there is nothing fixed and subjective evaluation is used for most trades.
Systematic being fixed, following a predetermined plan as written down/memorized/coded. You can execute systematic trading manually which some call discretionary trading but since no discretion is used, it's rather systematic.
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What is systemic then?
 
themickey said:
Your definition of systematic is...? If systematic = automation, for me this is too hard. Not because of coding but because of the reliance too much on no computer glitches, eg updates which cause continual mayhem and reliable uninterupted streaming data etc.
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Good point. World of difference between systematic and automated. The two shouldn’t be used synonymously. I automated out of necessity to implement a plan I couldn’t execute manually, and it was a huge and lengthy pain in my dick to roll out. I couldn’t develop a successful manual intraday system.
 
Sprout said:
Are there other keywords that are useful in front of that ‘:’ ?
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There probably are. I use define and unit, currency conversion (1 usd to jpy etc) and the usual calculator functions only.
 
I tried discretionary multiple times and it just didn't work for me. If you read Schwager's Market Wizard books there are a fair number of both types of traders.

I have a programming background and found that systematic works for me. I agree with the poster who emphasized backtesting. I need backtest results in order to have the confidence to trade live.

It may take a long time, but you need to find a method that suits your personality. There is no one size fits all.

Brooks
 
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