Discretionary Versus Mechanical System Trading

Discussion in 'Strategy Development' started by Murray Ruggiero, Nov 3, 2005.

Are you a Discretionary or Mechanical System Trader ?

  1. 100% Mechanical

    34 vote(s)
    29.8%
  2. 100% Discretionary, Charts, Indicators, no systems.

    39 vote(s)
    34.2%
  3. Use mechanical systems as indicators

    12 vote(s)
    10.5%
  4. I trade with systems but use discretionary trading to sometimes override them

    29 vote(s)
    25.4%
  1. Murray Ruggiero

    Murray Ruggiero ET Sponsor

    Let's discuss the pro's and cons of discretionary and mechanical trading. In real life very few traders are 100% mechanical or 100% discretionary so, let's discuss how these two types of trading can be used together or if they should be used together.

    If you override your systems using discretionary trading , please post how often and why you override them, for example not taking trades before a government report.
     
  2. bighog

    bighog Guest

    This boils down to the question: is it SCIENCE or is it ART.

    How about starting out it is more art and as one progresses it becomes more regimented and called science?

    So is it really an artform within the head and science in the implementation of whats in the head?...:cool:
     
  3. I don't even know what my system is doing during the day. I *never* over-ride it. Emotional (discretionary) trading is just silly. I have fail-safes, dead-man switches and the like to alert me when something goes wrong.
     
  4. blogtrader

    blogtrader Guest

    the best thing is to start mechanical and use that as a base to develop your other skills
     
  5. If you're a professional money manager, the "best" thing to do is say you're a discretionary trader, even if you in fact religiously follow a 100% mechanical system. Why? Because asset allocators and fund-of-funds people, demand tons and tons and TONS of information from system traders, their "due diligence" never ends. They want to test your system for non-correlation with other system traders they've given money to. They want to calculate jillions of statistics about your past performance. They want to fiddle with your system.

    On the other hand, if you say "I am a skilled discretionary trader, I trade based on my highly developed sense of the market, and my track record shows I have been very successful," they can't really pester you to death. Give them your track record, smile most sincerely, and say "well are you going to trust me, or not?"

    Saves lots of time and avoids plenty of grief.
     
  6. bighog

    bighog Guest

    blogtrader

    Think about your statement. My question would be how can you mechanize what you do not know? It is like the ole saying, Do not put the cart before the horse. I will shoot you a few examples of the transition of the art form to the scientific form in a couple of minutes, got to get some coffee.
     
  7. qtip

    qtip



    NIce post:)
     
  8. bighog

    bighog Guest

    Ok, back

    Most scientific or learned processes require a learning curve first, a FEW examples.

    ART ----------------------------------- Science
    ..................................................................................

    scribble---------------------------- Artist

    tinker toy------------Architect

    witch doctor-----------physician

    idiot-------------------Member of House of representatives

    tinkerer-------------Scientist

    loser------------------Winner

    cynic------------------------Lawyer

    single---------------Married

    bully-------------------Soldier

    children--------------Adults

    dogcatcher..........republican president

    go-cart--------------Formula1

    doodles..........Idea

    fiction-----------------Mission Statement

    domestic cars----Foreign cars

    training bra---------------Brassiere

    crook-----------------CEO-CFO-COO

    counting fingers........Computer

    BS' er....................Bush

    5 & 10 store---------------Wal-Mart

    girlfriend-----------------Wife

    fancy free---------------------Employed

    and on and on.

    I believe it is a fallacy to think the mechanics are a learning tool. Mistakes are a learning tool, the mechanics follow. hope this helps.... :D
     
  9. bighog

    bighog Guest

    They will pester you if you miss a hot mkt........:mad:

    Ron Reagan said, "TRUST BUT VERIFY"...that could also fit into the art form and science ledger.....:)
     
  10. Also, there is the "art" of creating a good mechanical system :D
     
    #10     Nov 4, 2005