With so much heated discussion regarding discretionary and rules-based (or systematic) trading methods, we thought it would be helpful to share an article Jim Dalton wrote on this subject. Anyone familiar with the importance Jim places on context will be rewarded to see that theme expanded in the article. Along with providing his perspective on what the two styles of trading mean to him, Jim also shares some suggestions for non-trading related reading material.
I think this article does several things very well. First, it gives traders a dose of reality on the differences between being a typical discretionary trader and being a successful discretionary trader. It also highlights the fact that the successful discretionary trader still has a plan and that the systematic trader can exercise discretion as he trades; neither is an all-or-none proposition. Jim also addresses the commonly seen trap of traders trying to use Market Profile like a recipe or template; Market Profile is just one, albeit an important, tool in the trader’s toolbox. The most important tool will always be the trader himself.
Go download the article and feed your brain some good material on discretionary trading.
