Hi, I am a little confused between the differences of mechanical trading versus technical trading. Does one offer more stability over the other, long-term? What is the primary difference between the two? Thanks
You can trade TA mechanically or use automation...now here is another word...discretion....it means how it sounds. some other words to note...Manual trading...System Trading... You know that some use computers as a tool to trade, instead of the 'old fashioned" way. Us Oldtime traders "Earn" our money...(said in that voice...hmmm. whats his name?) Technical analysis can be automated...canned.....discretionarily traded...systemized....and pastuerized... At the opposite end...there is Fundemental trading...Buy and Hold and investing could be discussed.
sure.... why not? The market is willing to take your money in any combination... Why are you playing dumb with me? Michael B.
I have never come across the terms before, other than technical analysis of charts. What criteria makes a trading system mechanical?
well, Mechanical can mean two things... First there is a quest to remove the emotion out of trading. Many posters on the internet seem to jumble terms about... Mechanical can mean that you are trading a well-defined system with rules manually (manually means click the buy/sell button...or sometimes referred to the "trigger") Or... Mechanical can mean to some misinformed writers to be automated. (automated is where the system uses the computer to place the trading on auto-pilot from reading the signals to processing them as an execution, no interaction from you is necessary, other than to monitor and keep a log of errors) Hope this helps. Michael B.
So, a manual mechanical system would have a longer shelf life than an automated one, because you can always adjust the different circustances, correct?
It's not that easy... Your ability to recognise when your system is failing and to define why, is discretionary. Only experience can teach you discretion, if you are not a genetically gifted super-trader. My suggestion is to get in there from the very beginning with real money on a currencies account. You can start with one dollar. Start out to trade after reading a thread here in ET, that interests you. This is you quickest path to consistent profitability...grow your money brick by brick.... grasshopper. Michael B.
Another thing... You must learn about money management. This is 50% of your work. The other 50% is not to discover someone sharing the wealth, but it is to spend thousands of hours watching candlestick charts and to discover the patterns of tick or pip movement..you will memorize this. You do not need to be a genius to do this, but it could make time go faster I have spent my whole life to arrive, I am a late bloomer. Anyways...through those screen hours you will get accustomed to the flow of things...do not limit the information you can take in at this stage...find your passion....you will know if you have it... and most importantly... Do not LOVE money, RESPECT it...its is only a tool for you as a trader, just as your charts and price quotes are. I personally am at a stage where I have trained my mind to use excel spreadsheets and price quotes only...I do not use charts...AND I AM manually SCALPING/ARBING (do not ask what arbitration is, perhaps there are others here that would like to contribute?) Michael B.
"Smith Barney makes money the old fashioned way: they EARN it." -- TV commercial starring actor John Houseman -Horribilicus (a technical, non-discretionary, mechanical systems trader who places his own orders manually)