Discretionary Trading Rules
Thursday, June 25, 2020 14:30 MDT » 16:30 EDT
Most traders split trading into 2 categories - mechanical and discretionary. Mechanical trading is where most start out - looking for a 'hard set' of rules to follow, usually based on technical analysis with rules like "buy when indicator A crosses indicator B". Mechanical systems also have the allure that they can be automated and that this automation saves you from your own psychological flaws. The downside of mechanical trading as most traders find out - is that it doesn't actually work for the individual trader. There's too many external, unconsidered factors outside of their rules for it to work.
Mechanical systems are often also called "Rules-based systems". So many end up thinking that discretionary trading must be trading without rules, that it's just "trading instinctively", "shooting from the hip", "trading your gut feel". Many traders do attempt to do exactly that, with disastrous results.
In this webinar, we consider what rules-based discretionary trading should look like. Where you start out and where you should end up.
This presentation will cover:
- Pure instinctive trading, why it fails, where you will end up entering the market, why you will lose.
- Understanding the benefits of discretionary trading & leveraging them.
- Creating a safety net - protecting yourself from yourself.
- What a discretionary rule should look like.
- What your rules should cover. Factors to add to your trading & when to add them.
- How to ensure your trading improves over time.
- The end game. What your trading should evolve into.
The last point is intended to give you an idea of what discretionary trading looks like for an advanced trader, where you are headed and how different your trading will look as you progress.
Peter Davies entered the world of trading in the mid 2000's. After becoming disillusioned with the results attained by fund managers and financial advisors on his own portfolio, Peter figured that even losing money himself would be better than paying someone to lose it for him.
Peter's initial intent was to focus on investing and in fact, he still manages his own long term portfolio. Somewhere along the journey he developed a passion for day trading. Peter feels most comfortable trading the "here and now" and feels that he has a better feel for what will happen in the next six minutes than the next six months.
Initially day trading news/earnings stocks with mixed success, Peter sought more information on the Order Flow aspect of trading and, though pleased with what he was taught, he was also somewhat horrified at the tools he would have to use. It seemed you needed to be a mental acrobat to read tape, especially in light of changes the CME made in October 2009. Reading the Order Book was also problematic. Peter set about creating tools that presented Order Flow information in a more logical manner. After sharing these tools with friends, he was convinced to go commercial and Jigsaw Trading was born. These tools are now rated number one trading software product (out of 285) and number four overall out of 10,331 financial products on the independent review site Investimonials
Peter splits his time between running Jigsaw Trading and trading the eMini S&P500 Futures. He has articles published on Trade2win, delivers trading webinars for Futures.io, Topstep Trader, Online Trader Central and FuturesTrader71 (FT71). Peter also writes a daily pre-market prep on the TopstepTrader Blog and appears twice weekly on the TopstepTrader Squawk Radio broadcast giving to the minute market analysis for Day Traders, live, as the action plays out. Peter's own blog is here.
Peter is known for being generous with his time and information and has developed the free "Order Flow Foundation Course" to give traders a full understanding of the nuances of reading Order Flow. This course is being used by numerous Proprietary Trading Firms to teach their intern traders about Order Flow theory and practice.
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