Of course there are a few different ways to define "mechanical", but for me, it's been the best way to go. I develop, manage and trade 100% mechanical systems for the S&P E-mini and have been more successful with less stress for years because of it. Mechanical systems are not meant to "take the mind out of the trader", it just means that there are set rules to use, and there should be no deviation from those rules. Whether you auto-execute or just manually trade a mechanical system, you'll probably be better off for at least finding out why these methodologies can work for you.
Hmm... honestly, I thought everyone used a combination of the two. I don't see why you would have to choose, but I guess I would choose mechanical if I had to. But generally, I open positions mechanically and close them at my discretion.
I agree with you and have moved 70% of the trading to the system/mech and I am very happy with making $$$$$ as the DAX, BUND, DJSTOX trade as I catch some winks. Check out www.strategyrunner.com for execution....... and never miss a good set up again.
When I first started trading in the mid-90s I was entirely discretionary. In fact, I didn't even use real-time charts; I only used end-of-day charts printed on paper. All of my trading decisions were made simply by watching the tape. As the markets have become more and more difficult to trade (i.e., the demise of the great raging bull), I have become increasingly more and more mechanical. However, there is still a large element of discretion involved in the application of my systems trading. For example, I do not use certain systems when major economic news is scheduled for release, and I am more likely to use a trend following system after a narrow range day (such as an NR7 day), and am more likely to implement a reversal system after a large range day. To answer the original question, I think it would have been easier for me if I had started my trading career as a mechanical trader. It's less emotionally challenging...but it creates new challenges...such as the task of creating systems with a positive expectancy and a health equity curve....and then constantly tweaking them to keep in step with the current market conditions. PEG LEG JOE
I wouldn't change a bit... I am more systematic now but I feel you see value when you have a discretionary background... I would have still worked hard on Gann Analysis (Trading) which is very discretionary but going into system trading from that background made me a better developer. Also, an edge above others that make systems because I know and code what others have no idea about. Also, having both ends helps me relate between both ends to develop and execute it. For example, system traders use brains to create a system but a discretionary trader uses their brains on the actual trades. They are very similar in nature but the process of objectivity is different. System traders tone your emotions when they execute but Discretionary traders tone you emotions before the trades... (Well the last few statements are based on my experience and my personality...) Anyways, it's good and better to have both end as a balance to have an unbiased mindset to react to the market... reacting in the style's term.
Agree 100%. Many solid traders I know are getting sliced and diced in these markets where the Mech/System have a better edge and less emotion. I like the 80/20 ration and have found it hard to be 100 system. Managed Futures will rule these market in the next 5 years.