In every profession, and trading is no exception, it’s important to use the correct terminology. Here’s a few of note that we use in our work:
algorithmic trading: trading based on predefined rules, including entry, exit and trade management, risk management and sizing rules, all coded in software. (We’ll cite PRO STR BT as the best example for such a tool, at least in the less-than-a-quarter-million-dollar price range.) Note: algorithmic trading may or may not be “all-the-time, 24/7” trading.
discretionary trading: trading based on rules at least some of which, for some reason, were not or cannot be coded in software. Yes, not everything can be, or is worth being, coded.
trading with no rules: we don’t have a name for this, except it’s “very bad trading”.
some combination of automation and discretionary trading: for many traders, often the most fruitful approach: as much automation as possible with certain steps along the decision tree assisted by a human. (See how we do this daily.)
Further notes:
successful 24/7 100% algorithmic trading is, although quite possible and done probably every day, that route requires financial, technological and mathematical resources that are beyond the reach of most mortal retail traders.
successful 24/7 100% discretionary trading is, in theory, also possible, but that route either requires gallons of coffee or a team covering each day’s 24 hour period or both. And you’d still have to deal with decision fatigue. Again, not a likely approach for most of us. And who would go into a nuclear war with a baseball bat?
So most retail traders’ best approach is, most likely, some combination of automation and discretion, a method we call human-assisted algorithmic trading. We at Remek! have found that using full-automation-while-in-the-trade (with PRO STR and PRO STR BT) to execute carefully selected trading opportunities can bring good results. Consider the following as you plan your daily trading process:
Select your timeframe sensibly. Chasing smaller and smaller timeframes while you’re thousands of kilometers from the exchange on a public internet connection in the hope of “finding an edge” is, after a point, a hopeless exercise. Hard as it is to believe, most successful retail traders have found their edge - after much self-damage - when they’ve moved on to higher timeframes. Think at least a 15 minute chart and up, e.g. a 240min chart in the context of the daily chart. (Remember: even a 4 hr chart is an intraday chart: there are six 4 hr candles within the day. We are Remek! are very much intraday traders, just not 2 minute traders!)
Design a process that you can follow.
“I just want to make x dollars between 9 and 11 every morning.” - the sooner you forget such BS the faster you’ll become a successful trader. Trading is statistical.
The edge won’t come to you. You have to go where the edge is. Your best chance of finding an edge (your edge), is an area, whether it’s a timeframe or a method, that is not in the focus of the …, how shall we put it… the crowd (popularly called “dumb money”).
And the list of items to consider can go on and on. Make your own list and maintain it. Hone your skills, expand your knowledge, tighten your helmets: you’re entering a battlefield.
