Benjamin Elijah M Garcia

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What is systematic vs discretionary trading?

Systematic trading uses predefined rules—often algorithmic—to generate entries and exits, leaving little room for judgment. Discretionary trading, on the other hand, relies on trader experience, intuition, and interpretation of market conditions. For example, a systematic trader might always buy when a moving average crossover occurs, while a discretionary trader considers macro news, chart patterns, and market mood before deciding. Each style has strengths: systematic trading offers discipline and scalability, while discretionary trading adapts to changing conditions and unforeseen events. However, discretionary traders risk emotional bias, and systematic traders risk rigidity when models fail. Many professionals combine both, using systematic rules for structure and discretion for final confirmation. The right mix depends on personality, resources, and goals.