Thread by @KiritManral

Trading systems or methods are sets of rules that are developed to provide traders with buy/sell/stop/exit signals.
Traders adopt systems that they believe will best help them know when to enter and exit trades, and in what direction;....

...
and where to place stops to protect accumulating profits or limit losses.
Without a system, making trading decisions would be a random process.

#MentorshipTradingProgramme

Three different types of trading styles that traders adopt.

These include discretionary trading, system trading, and hybrid trading.

It is up to each trader to decide which of these trading styles offers the best fit
given his or her beliefs and personality.

Discretionary trading uses a combination of intuition,
market data, and technical analysis (often through the use of indicators) to determine the most favorable times to enter and exit the market.....

...With discretionary trading, individuals make trading decisions “on the spot” based
on their interpretation of charts. Their decisions reflect the interaction of:
....

...
• Traditional indicators (e.g., moving averages, etc.). Chart analysis & interpretation (e.g., identifying areas of support & resistance, trend formations, etc.).
• Emotional involvement (e.g., “I dn’t mind tkng a greater risk, so I’ll place my stop a little further away”).

The trader’s justification for using this approach is that it:
• Is flexible in changing the rules in the face of changing market
conditions (e.g., if the market is trending, I use trending rules; if
choppy, I use choppy rules).
...

...• Allows you to improvise the use of trading methods when it seems warranted by the
• results achieved so far.
• Factors in years of trading experience.
Bottom line: If you trust your instincts, this could work for you. But you might want to ask yourself, “Do I feel lucky?”

System trading uses an objective and historically tested set of rules based on principles of technical analysis to determine when to enter and exit the market. Normally, this results in 100 percent mechanical trading.
It requires a lot of...

... homework ahead 2 select and to validate the winning trading systems. That is, traders simply follow the system’s signals without any input of their own. This kind of approach has sometimes been called
algorithmic trading, automated trading, black-box trading, or robo trading.

..Traders do their homework ahead, investigating available systems to select the program they will use. Once they’ve committed to a program, they follow exactly the buy/sell/stop/exit signals given by the mechanical system.

The trader’s justification for using system trading is that it:
• Is tradable—specific trading signals alleviate guesswork.
• Is simple—easy to understand and to trade. Generates high
performance—which can be more profitable for the long term than
intuitive trading.

..
• Builds confidence—which grows through use of back-testing reports.
Is mechanical—this approach makes possible full auto-pilot trading or broker-assisted trading.
• Is low risk—risk is reduced & calculated because rules & strategies can be tested before trading real money.

...
Bottom line: This approach is more effective than discretionary trading, but it can have timing issues, selecting a winning system
is a time-consuming job!

Hybrid trading is a combination of the two preceding methods. It allows traders to use a mechanical trading system as a guide for a
winning framework, while allowing the input of personal trading experiences or other own indicators to make final trading decisions.