The Discretionary Trader
A discretionary trader uses a combination of intuition, advice and non-
quantifiable data to determine when to enter and exit the market.
Discretionary traders are not restricted by a concrete set of rules. If you are a
discretionary trader, you can make buy and sell decisions using whatever criteria
you deem to be important at the moment. For example, you can use both a
combination of hot tips and relevant news stories from
The Wall Street Journal , and enter or exit the market based upon this information. If you begin to lose money,
you can immediately exit the market and change your trading method. You don't
have to use the same techniques day in and day out. It's a very flexible way to
trade that you can customize based on what you think the market is going to do at
any given moment.
For the discretionary trader, trades are made using gut instinct and intuition.
Unless a computer is generating a buy or sell signal and you actually follow the
signal, your emotions will
affect your trading. I explained in the introduction what
problems instinct and intuition could be in trading. Remember fear and greed? In
discretionary trading, technical tools such as indicators are sometimes used;
however, when they are put to use, they are utilized sporadically as opposed to
systematically.
Fascinated by the markets, the discretionary trader is ready to put on a trade at a
moment’s notice. The most uncomfortable part of trading for the discretionary
trader is when there is no action. So he will jump on any piece of information,
anything that will permit him to take a stab at the market. Above all, he craves
the action.