A discretionary trader will still have rules, i.e. a system, for deciding when to enter and exit positions. Most successful discretionary traders even have their rules written down or entered into a trading platform to automatically flag them. Many use software screens to find securities that meet their criteria. Their manual review may consider factors that are difficult to code into software, which they may even characterize as a “gut feel”, but if pressed they can usually explain exactly why a given chart represents a good or bad opportunity.
A systematic trader usually has multiple algorithms and applies discretion as to when an algorithm is ready to deploy, or when one is no longer working, or requires modification. Most trading algorithms only work in certain market conditions, or ultimately stop working altogether as the nature of trading changes. So, systematic traders have to keep a watchful eye on their work, deciding when to change things. So, while the discretion is applied differently, there’s no less of it required.
Definitely Systematic or Algorithmic Trading has an edge over Discretionary trading in many aspects. However, it’s not recommended for the beginners in the financial markets. Here are some of the striking differences between these two forms of trading.
Ariel Silahian
http://www.sisSoftwareFactory.com/quant
https://twitter.com/sisSoftware
I help financial institutions architect high-frequency trading systems that are fast, stable, and profitable.
I have operated on both the Buy Side and Sell Side, spanning traditional asset classes and the fragmented, 24/7 world of Digital Assets.
I lead technical teams to optimize low-latency infrastructure and execution quality. I understand the friction between quantitative research and software engineering, and I know how to resolve it.
Core Competencies:
â–¬ Strategic Architecture: Aligning trading platforms with P&L objectives.
â–¬ Microstructure Analytics: Founder of VisualHFT; expert in L1/L2/LOB data visualization.
â–¬ System Governance: Establishing "Zero-Failover" protocols and compliant frameworks for regulated environments.
I am the author of the industry reference "C++ High Performance for Financial Systems".
Today, I advise leadership teams on how to turn their trading technology into a competitive advantage.
Key Expertise:
â–¬ Electronic Trading Architecture (Equities, FX, Derivatives, Crypto)
â–¬ Low Latency Strategy & C++ Optimization | .NET & C# ultra low latency environments.
â–¬ Execution Quality & Microstructure Analytics
If my profile fits what your team is working on, you can connect through the proper channel.
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