The Right Mindset Human beings are emotional creatures and discretionary approaches allow those emotions to creep into your trading. Whether it’s greed, fear or frustration resulting in revenge trades or other irrational decisions…it’s simply a recipe for losses. Knowing a trading approach’s historical results ahead of time prepares you for the trade / investment. A simple example would be a 200 bar moving average crossover. Knowing I will buy on cross up and sell on cross down gives me freedom. I
2. Automation & Greater Efficiency Using trading systems allows you to automate your trades and delegate them to the computer. As a result, you no longer need to be stuck in front of the charts for hours at a time to exploit the profit opportunities offered by the markets. Systems and the mechanical approach to trading allow you to know exactly where to buy, sell, hold or do nothing. This provides not only a sense of empowerment; but, also a sense of
1. Objectivity Vs. Subjectivity Trades based on discretionary technical analysis are just that – discretionary. Traders make their own subjective analysis. Simply put, this makes them more prone to human error. A systematic approach relies on statistics and numbers. Analyzed properly, numbers don’t lie. Subjective trading is prone to the trader’s bias. For instance, I am a “gold bug.” For me to find a reason to buy gold is easy. For me to find a reason to short gold is rare.
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