Mechanical or Discretionary Trading - Which is Best?
Discretionary Trading
Pure discretionary trading will rely solely on the traders
judgment. For example a discretionary trader may spot a
particular pattern developing on a chart and decide to enter a
trade on that basis. It would be impossible to systemise their
trading because it relies on subjective judgments and 'gut'
feel.
Mechanical Trading
Pure mechanical trading involves the development of trading
rules that cover every situation, from entry to exit and position
sizing. The trader is executing a predefined plan. They must
however take every trade that the system gives them which can be
difficult if the trader begins to 'think' too much!
Both sets of trader are working hard at different times and at
different things. The mechanical trader spends time developing a
system and does not need to think whilst trading, merely
executing a plan. The discretionary trader has to be thinking all
the time that they are trading and can suffer from 'information
overload'.
Which is best?
The answer is probably a combination of both approaches.
Coming to the market with a proven strategy rather than relying
on gut instinct is far less stressful and gives the trader more
confidence. However the markets are always changing and one
trading strategy will not work forever - i.e. the Turtle Traders.
Strategies will always need updating.
Many traders will use a mechanical system to generate buy and
sell signals but then use discretion, reading the market, to
attempt to gain better fill prices.
All successful traders will use some sort of proven trading
strategy to begin with but the level of discretion allowed by it
will vary. A trader with no plan at all will fail.
Tim Wreford runs Online Futures
Trading, a website that provides information and resources
for traders. Tim also provides a free
day trading system, the results of which are updated daily on
the site.
Sri Lanka Rupee, Stocks Drop After Currency Trading Band Removed Bloomberg The central bank narrowed the currency's trading band against the dollar on Feb. 3 and Feb. 6 and today, prior to announcing its removal. The monetary authority raised benchmark interest rates for the first time since 2007 on Feb.
India Eases Currency Trading Limits for Some Banks Wall Street Journal By SUDEEP JAIN MUMBAI -- India's central bank has asked banks to approach it individually for relaxing some foreign currency trading limits and has already eased restrictions for some banks, a top official said Monday. "Some limits, based on their ...
iFOREX Adds Oil to its list of Tradable Commodities MarketWatch (press release) ROAD TOWN, Tortola, Feb 09, 2012 (BUSINESS WIRE) -- Leading currency trading company, iFOREX, has recently expanded its services, giving all Forex trading accounts direct access to oil CFDs. Targeting an audience that has little or no experience with ...
This January Azerbaijan's exchange currency trading totaled $82.5 million Azerbaijan Business Center Baku, Fineko/abc.az. The Baku Interbank Stock Exchange (BBVB) has renewed statistics of its operations. BBVB reports that in January 2012 the nine participating banks concluded 28 deals in 36 trading sessions in e-trading system (BEST).
FOCUS: Technology Buoys Retail Currency Trading, Reshapes Old Models Wall Street Journal By Eva Szalay Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Retail foreign-exchange trading is emerging as one of the biggest growth areas in the currencies space, and some of the trading firms that facilitate these flows are building up a whole new ...
Morgan Stanley Currency-Trading Head Stephen Mettler Leaves Bank BusinessWeek By Michael J. Moore Jan. 26 (Bloomberg) -- Stephen Mettler, who oversaw Morgan Stanley's interest rates and foreign-exchange trading businesses, has left the bank. Mettler, who joined the firm in 1997, retired, according to an internal memo obtained by ...
Bank of England and ECB Hold Steady, Indonesia Cuts CNBC.com [CNBC] ----------------------- MULTI CURRENCIES VS THE DOLLAR Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. Learn more: The essential vocabulary for currency trading is on Key Currency ...
RELATED ARTICLES10 Steps To Professional
Day Trading
Everyone trades a little differently. The trading method
outlined below is MY personal approach to trading.
5 Questions You Need To
Have Answered Before You Back-Test Your Forex
System
As 90-95% of new forex traders lose money within the first
3-6 months this article helps to guide new forex traders by
asking 5 questions that the forex trader needs to know
prior to back-testing their forex system.Let us jump right
in.
Adaptation to the
Realities of the Market
Do you think adaptation to the realities of the market is
the most important thing?Many times in the past I've
written about the need to adapt, the need to be able to
change your behavior relative to the market because the
markets are ever changing. I've stated that mechanical
systems may be workable, but for only a short time relative
to the life of markets.
Factors Influencing a
Currency Pair Exchange Rate
IntroductionThe exchange rate refers to the value of the US
dollar against the values of currencies of other countries.
Such a rate helps determine how much we pay for imported
goods and services and how much we receive for what we
export, among other things.
Discovering Turnaround
Candidates
There are many types of investment methodology out there.
All of them has their own merits.
Forex Trading -
Advantages and Disadvantages
What is Forex Trading? Forex, or Foreign Exchange, is the
simultaneous exchange of one country's currency for that of
another. This market of exchange has more daily volume,
both buyers and sellers, than any other in the world.
Forex Options Market
Overview
The forex options market started as an over-the-counter
(OTC) financial vehicle for large banks, financial
institutions and large international corporations to hedge
against foreign currency exposure. Like the forex spot
market, the forex options market is considered an
"interbank" market.
Forex Trading Online - 7
Reasons Why You Should!
Forex trading online is a fast way to use your investment
capital to it's fullest. The Forex markets offer distinct
advantages to the small and large traders alike, making
Forex currency trading in many ways preferable to other
markets such as stocks, options or traditional futures.
Forex Broker Involvement
Optional
To trade on the forex market, the largest financial market
on the planet, one must use a forex broker. Not unlike a
stock broker, a forex broker can also makes suggestions
about which moves to make when exchanging foreign currency.
Online Forex
Q1: When you consider that the foreign exchange market has
become the world's largest financial market, with over $1.5
trillion USD traded daily, where does it go from
here?A1:The FX market is unique, in the UK there is no
central exchange, we trade via the inter bank market.
Choosing A Forex
Broker
With currency trading becoming ever more popular, the
number of brokers is growing at a rapid rate. What should
one look at when deciding which broker to open an account
with? These are the important points to consider.
An Evaluation of the
Devaluation
A Minister of Finance is morally right to lie about a
forthcoming devaluation and a woman has the right to lie
about her age. This is the common wisdom.
Forex Made Easy for
Everyone
Forex made easy is as simple as you would want it to be.
The foreign exchange market is a worldwide market and
according to some estimates is almost as big as thirty
times the turnover of the US Equity markets.
What are Your Options
Regarding Forex Options Brokers?
Forex option brokers can generally be divided into two
separate categories: forex brokers who offer online forex
option trading platforms and forex brokers who only broker
forex option trading via telephone trades placed through a
dealing/brokerage desk. A few forex option brokers offer
both online forex option trading as well a
dealing/brokerage desk for investors who prefer to place
orders through a live forex option broker.
Chinas New Currency
Regime
The base unit for the renminbi is the yuan, which is how
the Chinese currency is most commonly referred to. The
official ISO abbreviation for the yuan is CNY, but it is
also commonly abbreviated in the forex industry as RMB.
Your Mother Could Make
Money In Forex Trading
The question would be not whether she could but rather
would she enter the Forex trading market. The Forex day
trading arena is a veritable snake pit ripe for scam
artists to bilk money out of unwary investors.
Example of a Profitable
Transaction in FOREX
To make a profit, in the FOREX, a trader can enter the
market as a *buy position* (known as going "long") or a
*sell position*(known as going "short"). For discussion,
let's assume you've been studying the EURO.
Momentum Trading: A
Practical Day Trading Strategy to Get Profits from Hot
Stocks
Momentum day trading can be extremely profitable when done
correctly..
Stock Market Report: Day
Trading or Swing Trading Online? Stock Investing
Information
Profitable day traders recognize that momentum trading is
among the fastest & most effective ways to harvest BIG
piles of cash in the stock market.The problem is that if
you don't know what stocks to look for and how to approach
them while limiting your risk, you won't even get close to
making some profits.
Forex Signal
Services
What are Forex signals? Forex signals are paid services
offered by some brokers and independent Forex annalists.
Companies that offer forex signals monitor and analyze the
market for you, providing you with their data via desktop
alerts, email or even SMS and pager alerts.
MORE RESOURCES updated Thu. February / 09 / 2012
