Trading Group Therapy – Discretionary Trading Rules – 30th April

Published on: April 07, 2020

In April’s group therapy session, we’ll discuss discretionary trading rules. It’s on 30th April as 12:00pm EST. 

Most traders split trading into 2 categories – mechanical and discretionary. Mechanical trading is where most start out – looking for a ‘hard set’ of rules to follow, usually based on technical analysis with rules like “buy when indicator A crosses indicator B”. Mechanical systems also have the allure that they can be automated and that this automation saves you from your own psychological flaws. The downside of mechanical trading as most traders find out – is that it doesn’t actually work for the individual trader. There’s too many external, unconsidered factors outside of their rules for it to work.

Mechanical systems are often also called “Rules-based systems”. So many end up thinking that discretionary trading must be trading without rules, that it’s just “trading instinctively”, “shooting from the hip”, “trading your gut feel”. Many traders do attempt to do exactly that, with disastrous results. 

In this group session, we consider what rules-based discretionary trading should look like. Where you start out and where you should end up. 

• Pure instinctive trading, why it fails, where you will end up entering the market, why you will lose.
• Understanding the benefits of discretionary trading & leveraging them.
• Creating a safety net – protecting yourself from yourself.
• What a discretionary rule should look like.
• What your rules should cover. Factors to add to your trading & when to add them.
• How to ensure your trading improves over time.
• The end game. What your trading should evolve into.

The last point is intended to give you an idea of what discretionary trading looks like for an advanced trader, where you are headed and how different your trading will look as you progress. This will be an interactive session, we will be taking a look at existing customer rules and looking at how we might refine them, there will be lots of Q&A/discussion.