Whats the difference between mechanical trading and discretionary trading?
In mechanical trading you take trades as called by your mechanical system, in discretionary trading you choose the best trades from those suggested by your methodology. I could also put it this way: mechanical traders are like gatherers (they basically collect what the system gives them), while discretionary traders are definitely hunters (they go after the best, juiciest piece of meat, and pursue it aggressively). One more way to view the difference between the two is via the analogy of big government versus small government. The former comes with many strict rules and tends to be inefficient, while the latter involves relatively few rules that are flexible, which makes it more efficient than the former. Yet another way to delineate the difference between the two trading styles is this: in mechanical trading, your systems pretty much own you, in discretionary trading you own your methods. Finally, while purely mechanical trading can be suitable to virtually everyone and it usually tak
