So I’ve just completed the BabyPips school! And now I’m further educating myself by reading ebooks while taking notes.
I’ve read up on two types of trading, discretionary and mechanical. Currently, I am leaning towards discretionary trading, is this a bad direction for a beginner trader? Should I be a mechanical trader before discretionary (as this topic wasn’t touched upon in the BabyPips school so I’m just assuming this may be the case.)
Just want to know what anyone else thinks.
Thank you
What helped me when I was starting out was understanding that there is no better way of trading than the other. I mean swing trading isn’t better than day trading or vice versa. My system isn’t better than yours. Discretionary isn’t better than mechanic system. It’s all about understanding yourself and what works for you.
Let me give you an example: I don’t like losing I hate losing so my RR is low than most traders around 1.8:1 sometime 1.5:1 but a friend of my has this it only takes one trade mentality he uses 2.5 sometimes 4:1 RR he loses most of the time but his comfortable knowing it will only take one win to wipe the loses away…
Feel to ask questions on the forum or inbox me. #nevergiveup.
I think discretionary trading is not a good idea for a beginner.
You have not yet developed a database of market experiences to give your discretion an edge.
To me discretion is nothing more than not having a system and just going off a whim.
There are profitable discretionary traders out there - but many of them are well versed in fundamentals and can read how the whole macro picture affects things.
It’s interesting though why you think you are more suited to this type of trading, would love to hear your reasons
Hmmm. 
Personally, I think it’s going to be a lot easier for a beginner to follow a system or strategy. There are already rules in place and you just have to watch out for these entry and exit rules. 
But as you learn more, I think there’s no problem in eventually becoming a hybrid.
Hi, I wrote short article about that on my website but I copy it here. Of course this is my personal opinion 
Regards Greg
When you start your forex adventure, you should make decisions about how to invest. There are two options to choose from, trade discretionally or using Expert Advisor (EA).
You sit in front of the computer all the time, waiting for opportunities to take a position, even a few hours.
During trading, you can improve or change something, not always for the better.
Possible delayed reaction to the generated position signal. Everyone can have a worse day.
Manually checking strategies on historical data is very time-consuming.
Physical limitation to several markets or time frames.
Trading is more stressful with larger amounts.
Limited time for everyday activities, trade itself and the development of new strategies for the future take up a large part of the day.
You may need high-quality equipment or services (mainly network connection) to invest according to your assumptions.
As you can see, discretionary trading requires a lot of time and work to be done at the expense of private life (meetings with family and friends).**
With the development of technology, traders got new tools for creating strategies and testing their quality, and the physical placement of orders took over the strategy control programs, saving a lot of time.
Below I present the characteristics of algorithmic trading:
The robot is devoid of emotion, it does exactly what it was designed for, no more, no less.
Apparent transfer of responsibility to an automatic system. You can blame EA for the losses, but remember who designed it (still trading purposes) installed in the platform and allowed trade.
quick compare, you can compare the results of backtesting and real trade, if there are big differences, which means the strategy does something completely different, you just turn it off.
Easy backtest, the task will do the program for you in a few minutes.
Possibility of trading on dozens of markets or periods simultaneously.
EA controls trade around the clock, when you sleep, meet family and friends. He doesn’t need sleep, rest, he is always ready to make transactions.
The process of creating and implementing automated strategies is at least 10 times faster than performing the entire process yourself.
Reduction of stress resulting from trade, mechanical approach to investment
Thank you everyone for your responses,
I’ve decided to become a mechancial trader for now, and then when I get more familiar with the markets become a hybrid trader.
Thank you again!
J
u can t decide nada, ur nature will do it for u thro ur results!!! start trading and u ll discover eventually what kind of a trade u are.
cheers
Reading books will enhance your knowledge and make you an intelligent trader. And yes, you should first become a mechanical trader before discretionary. Over time, you will understand what works for you.
Well, given that my knowledge of economics and market structure is only slightly higher than that of your average cucumber, I’m working on developing a good mechanical system right now. That being said, I’m not using an EA or bot or some pre-packaged tripe that some “expert” has sold me. What I AM doing is a lot of reading, and a lot of listening. You don’t need to be psychic to figure out who around here is worth listening to. You just need to practice some discernment and patience. Don’t let your anxiousness to make a bijillion dollars make you think you can cut corners. Whatever approach you take, you have to pay your dues and learn for yourself.
Honestly speaking, I personally do not believe in discretionary trading. It seems like trading off the seat of one’s pants, depending on gut feeling to take trades. I once tried to trade with an open ended approach before and it proved to be a disaster. I still am trading a mechanical system, (not EA or Bot but simply a strategy with clear cut rules for entry, exit and money management), which I do not even dream of changing anytime soon. All I always do is adjusting my mechanical system as the market evolves.
So, to answer your question, It is always better to go with a mechanical approach. This will help you eliminate unjustified results. By unjustified, I mean that you will not be able to trace why you lost or won a trade because your approach is all over the place.
Profitable trader.
In my opinion, this is the most important thing.
Personal dynamic work with constant results analysis is exactly what most traders are interested in. But the choice of tools/strategies/approaches, and so on - this is an extremely individual moment, which everyone chooses for himself.
It depends upon how quickly you learn and understand things. If you are good with discretionary trading, you might as well continue with it.
Personally, I would suggest a mix of the two.
If you have developed a strategy/system that you believe gives you an edge in what is basically a probabilities challenge, then it is pointless to then override it by applying an “ahhh but” mentality about its signals.
Trading is about the overall result over time and not each individual trade. So your strategy is designed to perform over time. This also includes the risk/money management criteria that keeps your profitability intact, again, over time, not per trade.
So if you overlay this strategy with a “yes but” or “but what if” or “but on the other hand” then you are diluting the functioning of your strategy.
However:
I don’t think there is anything wrong with a discretionary angle which, whilst not questioning the actual trade signal, does question the current trading environment. E,g, do I enter a signal one hour before a Friday close, or on/before a US holiday or prior to a major event or data release that might result in excessive volatility.
And for me it is important that trading does not turn into a mechanical emotionless process.
There is always room for interest, new solutions and bright colors!
But isn’t discretionary trading just a rational-sounding title for random decision-making? Or just not bothering to work out a strategy’s rules?
I don’t think so. For me, discretionary trading is recognition that every trend/move is unique and do not all fit a “one size fits all” strategy approach.
The discretionary approach adds another layer on top of the rule-set that asks “does this make sense in current circumstances?”. It could be prior to a major release, or a meeting, or a new factor that is not covered in the rule-set, or, for example, price misses a target by a few pips and then starts to drop away quickly - Do you decide whether to “step in” and manually take the profit or let it run all the way to B/E or SL?
Aeroplanes can fly on automatic pilot, but would you like to fly in a commercial jet that has no human pilot or co-pilot to step in when the unexpected occurs?
PS: Surely any strategy that is based wholly or partially on fundamentals and/or sentiment is discretionary in nature?
I’m not convinced. In essence, at any given point in time price can only do one of four things - go up fast, go up slow, do down slow, go down fast. It is very possible to plan the reaction to every one of these in advance.
Obviously, its not going to be possible to pre-set your trading platform to react for you - I’m not aware of any systems that will for example close a position if price does not rise X pips in X bars. But the lack of that feature in a trade platform does not make the trader discretionary.
And why would any trader not plan their reaction to each one of the 4 price actions? What would justify not reacting to one of these regardless of its root cause?