Discretionary traders can also use trading systems for finding opportunities, screening stocks and charts, finding entry points, etc. But usually the key decisions such as position size, target price, stop-loss and exit points are taken manually. Thus decision trading requires good trading knowledge and hopefully some trading experience.
- The first and foremost thing to note is that discretionary trading puts pressure on the mind. But the trader can use trading system(s) to ease up the process.
- As decisions are made manually, large-scale trading and trading a variety of markets/instruments/securities in short-term intervals might be difficult.
- The strategy is better for swing trading, intermediate and long-term trading; but not for short-term trading such as intraday trading.
- The strategy is good for persons who want to conduct trades with a high degree of control, persons who can spend time for stock screening/trading.
- Discretionary trading offers more flexibility and adaptability.
- Human feelings like fear and greed can cause problems in executing successful trades.
- Decision based trading demands a high degree of discipline, proper timing and attention.
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