Discussion in 'Psychology' started by scalper21, Jun 21, 2006.
The line between
'Discretionary Traders who uses TA'
System trader who manually enters trades'
is a bit blurry, but I do know what you're trying to ask. After, all, if you are manually entering your trades, that's a discretionary component - you have the ability to override your system because of some perception of markets conditions or other factors.
Yes, my trade entry and exit signals are very systematic (written down and could be computerized) but my perception of context (> take the trade, take only at a great price, no I dont trust this) is 100% discretionary. I classify both as technical analysis (price patterns and behaviour leads to entries and exits) so am a discretionary technical analyst.
That context can give you a 20-30% improvement in win loss ratio and to me is why I exercise discretion.
Can you be a system trader and not use technical analysis at all?
Well... I guess that depends on your definition of technical analysis. TA typically takes variables such as price, volume, bid/ask size, and myriad others and then processes them in some way or another, according to some formula or another. Now, let's say your system is as follows
'Buy MSFT if you wake up in the morning and your cat is sitting on your bed, sell MSFT is your cat is in the living room'
That's a system, but is it TA?
The word system as it's used around here generally refers to a method of trading that incorporates fixed buy and sell rules which are automatically generated.
I can't say whether or not there are systems out there looking at variables that are so far removed from either the actual activities of the markets or market - related financial indices like interest rates that they would be thought of as not using 'technical analysis'. To me, it's all technical analysis, even if you're correlating seasonal temperatures in North Africa with coffee prices or the number of words in Bernanke's speech with interest rate activity 90 days from now.
Yes, this would sum up my trading as well - all signals are generated by systematic analysis, but final trading decisions are discretionary, mostly because I am not a good enough programmer to include diversification factors in a 100% mechanical system. I don't want my trades to be overly correlated and I have to make sure they aren't, manually.
What kind of trader are you if you only follow price action and use support & resistance?
Discretionary & Technical?
Good question! Since you are analyzing variables taken from the movement of the instrument in question, I would argue that this is a form of technical analysis. You are using technical analysis to identify potentially tradeable situations. Your brain is acting as the software program. Then what do you do when price action and support and resistance indicate that a position can be taken? If you flip a coin, you have a crude system. If you assess the situation and make a decision based on your best guess, you're a discretionary trader. I assume that's what you are referring to.
No "100% automatised system trader using order book choice" ?
Setting up a good poll is harder than it looks!
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