Discretionary Trading is based on market analysis and is one of two ways to trade the Forex market. In fact, there are two different strategies: discretionary trading and mechanical trading. The choice of investment methods depends on the experience and personality of the trader.
Discretionary trading is a method that is based on the experience of the trader, who must evaluate when to open or close a position. In order to work with discretionary trading, therefore, one must have considerable experience and a good knowledge of the Forex market.
Discretionary trading in fact means the purchase and sale of securities or financial instruments in general for speculative purposes characterized by the absence of a precise system that determines investment choices.
The discretionary trader decides his own operations on the basis of his own ideas and evaluations and/or on the basis of personal experience without these choices being supported by a set of explicitly defined rules.
Discretionary trading hides many pitfalls and is therefore not recommended for inexperienced traders. The systems that are implemented in discretionary trading are not always effective, given that the market is constantly moving. Furthermore, systems of discretionary trading that have worked in the past do not necessarily work in other situations.
The discretionary trading techniques are very personal and reflect the experiences made by the trader. It is not possible to decide with certainty whether discretionary or mechanical trading theories are better, but we can advise you to read Mechanical Trading vs. Discretionary Trading to get a clear picture of the advantages and disadvantages of the two trading methodologies.
Money.it also advises traders who are inexperienced or not yet certain of their strategies to venture into investing with discretionary trading techniques, since they could seriously endanger the capital invested.
