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<DIV><FONT face=Arial>
<DIV><FONT face=Arial>Very interesting piece, Scot. Just one
question, before even considering whether or not to take you up on the other
side of your argument: are you talking about position trading or day
trading. I would not presume to argue with you over the former, but
would certainly have a few points to make about the latter!</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial>Look forward to hearing from you further,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial>Bill Eykyn</FONT></DIV>
<DIV><FONT face=Arial><A
href="http://www.t-bondtrader.com";>www.t-bondtrader.com</A></FONT></DIV>
<DIV> </DIV>
<DIV> </DIV></FONT></DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:scot.billington@xxxxxxxxxxxxx";
title=scot.billington@xxxxxxxxxxxxx>Scot Billington</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:realtraders@xxxxxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Monday, January 24, 2000 6:12
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [RT] Systematic vs.
Discretionary</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>I think one of the critical decisions a trader makes, and
one of the true distinctions between trading styles is systematic vs.
discretionary.<FONT size=2> When I say systematic trading, I mean
mechanical trading, X closes under Z with A, B, C in line, I sell with a stop
at Y EVERY time.</FONT></FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I will make the argument for systematic trading and invite
someone to do the same for discretionary.</FONT><FONT size=2> This is my
opinion derived from what I consider to be a fairly solid argument.
People have made money with all types of trading, so I do not begin to suppose
that what I believe is the only or even necessarily the best way to
profit. I do believe that my points are valid and do provide the path of
least resistance to successful trading. I will also (and I encourage
anyone arguing for discretionary to as well) constrain my points to sys. vs.
disc. only, not subsets of each class. I will try to stay as objective
as possible.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>The major advantage that systematic trading offers
is that</FONT> <FONT size=2>it removes as much human emotion as possible
from the trading decision. Human nature wires us to be losers in the markets.
Problems at home, traffic, surroundings etc. all affect our emotional
disposition, which in turn usually affects our market perceptions. It is rare
to be able to make clear, consistent, rational trading decisions under the
circumstances of life. It is very difficult to keep your 'mood', good or bad,
out of your thinking process. With a system the traders reactions to the
market environment are determined outside of market hours allowing for the
maximum amount of reflection and for the best judgment of the
trader. This has not even begun to consider how much affect our recent
trading results can have on our decision making process. Win a lot, feel
good, overly aggressive. OR Win a lot, afraid of losing it,
overly conservative. Lose a lot, want it back, double down...etc.
</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Second major advantage is that of consistency. Most
strategies work sometimes and don't work sometimes. One needs consistent
application of a theory over a large set in order to catch the good and the
bad. A system trader by definition will make the same decisions to the
same relevant information time after time, year after year. He/she
allows creativity to come out during research and testing, but reacts the
actual trading process like a robot. The model of consistency. The
burden of consistency on a discretionary trader is enormous. When one
is discussing a trading career that may last into the decades, one can
see how hard it is to use the same thought process again and again.
Weigh the same factors again and again. Another note is the incredible
pressure placed on the trader and the wear it might have over a lifetime,
particularly if decisions are being made 'on the fly'. You have had a
solid year as a discretioary trader. Can you be sure that you can repeat
that performance again and again and again? There is much less day to
day pressure on the systematic trader.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>A third advantage is in testing theories and delineating
between problems with the method or mistakes by the trader.
Discretionary trading can not be back tested, and it is very difficult to
judge the underlying theory, since the individual trader plays such a large
roll. The only way to judge a discretionary method is by real time
trading and even then one can not place the cause of losses. For example
let's say I am trading discretionary method X, and I am not making money. Am I
going through a normal down period? Am I bringing too much emotion and
inconsistency into my decisions? Are my problems or triumphs at home
influencing my trading? Or, does method X not give me a market edge? How do
you tell? Am I looking at the wrong fundamental factors/market patterns, or am
I nervous about my impending wedding, or does the entire idea just not
work? Systematic trading avoids these paradoxes. Systems can be back
tested and future performance, therefore, estimated. Emotions are removed, and
broken rules alert the trader to their re-appearance. Discipline and
consistency are much easier to have and to track when one trades a
system. If losses occur, one can say, "Have the rules been
followed?" If they have, you know the problem lies within the
method. If not, the problem lies with the trader.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Last, discretionary trading attracts many weaknesses of our
psyche. With discretionary trading we might be able to sell the high,
buy the low, or be 'right'. Market prediction becomes foremost. We
can become too tied to each individual trade or decision rather than seeing
them in their proper context as one of a very large
set. Discretionary trading's siren song is the possibility of
all winners or to be all knowing or to have figured out some market order to
the nth degree. While these things may or may not be possible, they are
NOT necessary in order to make large trading profits.</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV><FONT size=2>Scot Billington</FONT></DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Mon Jan 24 06:42:53 2000
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Date: Mon, 24 Jan 2000 07:27:01 EST
Subject: [RT] day trade OMKT
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Status:
Good mornings
OMKT is above both 10 and 40 day m/a
the macd turn positive on 1/21
ressistance@xx
and major support@xx
poiny&figure BREAK down@xx
volume Fri to the upside is above the 10 day average
if it opens gap up 1.25- 2.00 sell short
stop loss for short 1.25 above opening price
profit objective 45.375-45.9375
if opens unchange to up <1.25
buy long with stop@xxxx under the openning price
(chart curtsy of lenny)
happy trading
Ben
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