What is Discretionary Trading?
Discretionary Trading
Forex Trading Glossary
Quick Answer: Discretionary trading relies on the trader's judgment rather than rigid rules, offering flexibility but demanding strict discipline.
What is Discretionary Trading?
Discretionary trading relies on the trader's judgment to make decisions rather than rigid rules or automation. It allows flexibility but demands discipline and experience.
Discretionary Advantages
- Adaptability: Quickly respond to changing market conditions.
- Contextual awareness: Incorporate qualitative information such as breaking news.
- Flexible risk: Adjust position sizing based on confidence.
- Creative setups: Identify opportunities that rigid systems may miss.
Stay Structured
Even discretionary traders need documented processes to avoid impulsive decisions.
Best Practices
- Written plan: Outline entry criteria, risk limits, and review routines.
- Journaling: Record reasoning behind each trade to evaluate performance.
- Risk management: Use consistent sizing despite the flexibility of discretion.
- Continuous education: Stay informed about macro trends and technical developments.
Related Terms
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