![]() Unless a computer is generating a buy or sell signal and you actually follow the signal, your emotions will affect your trading. It’s a very flexible way to trade that you can customize based on what you think the market is going to do at any given moment.įor the discretionary trader, trades are made using gut instinct and intuition. You don’t have to use the same techniques day in and day out. If you begin to lose money, you can immediately exit the market and change your trading method. For example, you can use both a combination of hot tips and relevant news stories from The Wall Street Journal, and enter or exit the market based on this information. If you are a discretionary trader, you can make buy and sell decisions using whatever criteria you deem to be important at the moment. ![]() Finally, the systems and money management strategies are refined and the individual becomes successful as a system trader.Ī discretionary trader uses a combination of intuition, advice and non-quantifiable data to determine when to enter and exit the market.ĭiscretionary traders are not restricted by a concrete set of rules. It is at this stage that the trader ordinarily starts to make money. Eventually, as even employing technical indicators fails to move the trader into profitability, the trader moves into the third stage and starts to write systems based on quantifiable data. The amount of money lost generally determines how long it takes the individual to start using technical indicators to make trading decisions. In the broad category of “trading the markets”, there are basically three types of trading: Discretionary, Technical, and System-based.Įvery trader usually starts out as a discretionary trader.
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