Sounds like a dumb question reading it back - I guess what I am really getting at is do you (those who consider yourselves successful traders) still have a system for entries, exits, mm, which you apply discretion to or are you entirely discretionary with few system-type rules?
I now trade with zero discression, 100% rule based, although I had to accumulate a lot of discretionary trading experience to get there.
People quite rightly take the **** out of ODT, but he's spot on with his comments regarding diversification. The variation in system performance from year to year can be quite sigificant, this years star may well become a dog next year and vice versa. A bit of diversification helps, and there's a few neat money management tricks available (even with a simple % based allocation your worst performing systems are generally reducing position size, and your star performers are generally increasing position size)
There's a whole bunch of problems with discretionary trading that are eliminated the moment you impose a rigid framework, one of the problems is that its almost impossible to allocate any kind of sensible metric on performance when using a discretionary approach, and therefore much harder to determine if your improving over time. Questions such as did I capture 10,20,30,40% of a move are impossible to answer when you have no idea when you'd get in, out !
I know everyone here makes 1000 pips a week, they have a consistantly rising equity curve, and they never have a losing trade, but in the real world where we have a random distribution of gains and losses, objectively measuring performance matters, and discretionary techniques make that much more difficult than it needs to be.
Unfortunately this is a bit of a catch 22 situation, you'll never be a successful systems trader until you've mastered a discretionary approach, and you'll never be a successful discretionary trader until you at least understand system based trading. There's a definate synergistic benefit to approaching the problem from both angles.
That probably doesnt help !
