Strategies vs. Systems (Part III)

In Part II of this series (http://www.optionfanatic.com/2012/05/16/strategies-vs-systems-part-ii/), I continued to argue that trading strategies are optionScam.com.  Let’s continue this analysis from another angle.

In the quest for consistent trading profits, traders are commonly discretionary or algorithmic in their approach.

Much ado has been made about the differences between these two.  If you are a discretionary trader then you have trading strategies with guidelines.  If you are an algorithmic trader then you have trading systems with rules.  The former relies somewhat on common sense and gut instinct.  The latter depends on programmable criteria that can be evaluated and executed by a computer.

At this point in my trading career, I strongly suspect that through a complex interplay of logic and human psychology including but not limited to the effect of wins and losses on emotions and memory, Maslow’s hierarchy, and ego fulfillment, discretionary trading may be optionScam.com at its finest.

That’s nothing short of a mouthful.  In future posts, I will break down each and every one of these elements.