Please share your knowledge and experience about this topic.
• Is it harder or easier to trade profitably with a mechanical, automated system compared to profitable discretionary trading?
• Is it a natural evolution progress to first trade profitably in a discretionary manner, and then to trade mechanical systems, or they are so different that we could say that somebody could trade profitably a mechanical system even if he can’t trade profitably in a discretionary manner?
• Is it possible that someone could trade profitably a mechanical system but would unable to trade profitably in a discretionary manner?
• How would we picture: if someone starts to trade profitably a mechanical system this probably would mean that at the same time he would stop trading in a discretionary manner because mechanical trading is a so much elevated process, a way more effective method of making money?
Neither are difficult or easy . If by mechanical you mean taking signals generated by a set of variables derived from indicators or price patterns then played the same way at every occurence of the variables then you have to take what the conditions offer and play them through the cycles of the market , good or bad . Then you will know if its good or not . If by discretionary you mean guessing (?) what will happen next then its impossible to determine if that works because the variables are always different .
But please elaborate your definitions of discretionary and mechanical , thanks .
I think that it would be difficult to develop automatic trading systems without a prior discretionary trading experience. Mechanical systems are rule based, and developing those rules requires some hands-on experience of trading the markets.
Yes. The skills required are different.
No. This maybe true for scalping and HFT, but not necessarily the case for larger time frames.
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How do I mean automated mechanical and discretionary
Mechanical, I mean:
I could say fully automated instead.
Positions are opened and closed by a computer program, an electronic algorithm based on programmed rules. This algorithm works on its own, a human don’t needed to press any keys. Sometimes you adjust the program, the algorithm, but the program could run unattended for several days.
Discretionary, I mean:
You have to sit in front of a monitor, and have to open your trades manually. Maybe closing of trades are done via NinjaTrader’s advanced trading management, but you have to look your charts and press Enter to initiate your trades.
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