In today's article I want to talk about two types of traders. They define two different styles of trading.

The important thing I realized, engaging in trading - there is no trading system that would suit everyone. We all have different financial goals and a different perception of risks. Read this post until the end, think and decide what style of trading suits you most.

System Trading

System Trading is based on specific rules that the trader does not have the right to violate. This means that if trading strategy gives you a signal to buy, then you should definitely buy. There is no place for the human factor and reflection.

The first systems traders, which I learned about, were "turtle-traders." They traded futures on the 20 and / or 50-day breakdown. In total, I think, about 18 instruments. Their task is to catch the trend. Drawdown reached in some cases 40%. That is, the number of losing trades was great.

Now imagine that a system trader suddenly decides not to enter the market, although he got strategy signals. And just at this moment trend starts - a source of profits of this trading style. As you know, one mistake, so it is the human factor, resulting in a significant loss of the account.

If we consider the main advantages of the system trading, that is simplicity, transparency and ease of use. From trade completely excluded emotion and the human factor, which is undoubtedly also important. Traders who are familiar with programming can easily computerize his strategy. Now the market is full of such computerized robots. Most of their activity is traced within the day.

Of course, the system strategy should be thoroughly thought out and the emphasis falls on risk management. The number of instruments should be limited.

Discretionary trading

This is the flip side of the coin. Here you decide to enter into a trade or not. For example, your strategy gives a buy signal, but the chart tells you that a trend is nearing completion. Here you can decide how to proceed.

Do not think that the discretionary trader does not sell or buy by the rules. He also has a strict trading strategy.

I prefer choice, so I prefer to discretionary trading. I like it when there are different options. This creates competition. And the latter, in turn, the best money-making opportunities.

Anyway, any style of trading with proper approach would allow making money. The choice depends on you: your character, goals, preferences, risk tolerance etc. The only thing from what I want to warn: do not jump from one style to another, one strategy to another. If a trader cannot find his place at the market, it says rather, that person does not know the basics, than trading isn’t his calling.

I hope you got some useful information for reflection. Trade stably without turning over trading systems frequently. Remember, the best bird in the hand is worth two in the bush. Wish you successful trading; leave your questions, opinions, advice.
Translate to English Show original