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Mechanical or Discretionary Trading - Which is Best?
Pure discretionary trading will rely solely on the traders judgement. 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 judgements and 'gut' feel.
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.
10 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.
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.
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