I am an independent Futures, Commodities, Currencies, and Stocks trader. I am mainly a discretionary trader but I also use my home grown automated system trading at times. I would say that I am about 85% discretionary and 15% systematic.
My trading style is using mosaic insights to develop trading strategies that I can call my own. Mosaic insights is a process where I assemble smaller pieces of trading insights from various sources and combine them to form a bigger picture.
I pay attention to what veteran experts say and do. Even innocuous things that they say in passing can be valuable. I would scribble down my observations and contemplate upon it later on. At times, this leads me to insights which I incorporate into my trading.
I avoid common pitfalls of listening to self-proclaim investment professionals by selectively listening only to professionals who had withstood the test of time. Legendary investment professionals like J. Peter Steidlmayer, Mark B. Fisher, Warren Buffet, and George Soros are examples of people I pay attention to. They have a lifetime of valuable insights that I can draw upon to stimulate my mind in the development of new trading strategies.
Here is a real world example. One of the trading insights that I gained is that to preserve my capital. There are two forms of capital. One is the capital that I have in banking and brokerage accounts. The other capital is mental capital. During dull times when the market is not moving, I don't want to be staring into my computer screen all day long. I will be wasting mental capital. That is the time when I turn on my automated system to trade for me. There are several advantages computers have over humans. Computers can do computations much faster than humans and computers can do repetitious tasks without tiring or getting bored. So I use automated trading when the market is dull. I save my mental capital for when the market starts to trade.
When the market starts moving, I turn off system trading and switch over to discretionary trading. The human mind is much more adaptable at handling the unexpected.
During the flash crash on Thursday May 6, 2010, I found out afterwards that other traders were also thinking along similar line as me. They turned off their computers when it got too volatile and uncertain. The people who didn't turn off their black boxes suffered the aftermath as liquidity vanished and the market dropped like a rock. Their algorithmic black boxes went wild. Their computer algorithm sold some stocks and ETFs down to ridiculous levels of one penny. I was shocked that some prices hit rock bottom at zero. The action that day reaffirmed my strategy of when to trade systematic and when to trade discretionary.
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