What You Need To Know About Discretionary Trading

By | May 12, 2021 4:30 pm

Most of New and Aspiring traders will often start their journey with a discretionary approach to trading, where they get to decide which trades to make and how to manage them, based on the information available at the time.

The definition of discretion is the ability, the power, or the right to decide or act according to one’s INTUTION.

A discretionary trader has a set of rules that they tend to follow their trading , these rules are modified or replaced based on their experience and what works best for them.

A discretionary trader studies the signals and charts, and then makes a decision on whether to buy or sell. The trader calls the shots in discretionary trading i.e when to enter or exit positions.

Traders  have to make decisions – use HIS/HER judgment – to enter and to exit the market.

Can you let yourself follow rules or a plan that tells you exactly when to enter and exit?

In discretionary trading, maximum risk originates from decisions taken under the influence of uncontrolled emotions of the trader. In most cases, these emotions can lead to over trrading or Revenge Trading.Hence in order to make a profit, it becomes extremely important to not just have a profitable strategy, but also have a check on one’s emotions.

Discretionary trading involves judgment, and our judgment is highly influenced by our beliefs about ourselves and our deepest (subconscious) fears and hopes. This is why you (and most traders) repeat the same mistakes despite all the promises to do better next time, despite the big post-it note on your monitor.


Yes, we look at the numbers and the patterns and we think we are making a decision based on that stuff, but in the heat of the moment what becomes more important is the desire to be right, or the desire to not be wrong. Someone who can quickly take in lots of visual information and make decisions based on it might become a successful discretionary trader.


The numbers and the patterns are typically somewhat ambiguous anyways; we all know there’s no certainty in trading. If you are a discretionary trader who says, “its just all about the probabilities”, you are sorely mistaken.

For a discretionary trader it’s really about how well you deal with uncertainty, what goes into your judgment process when facing the uncertainty of those probabilities in the heat of the moment.
It’s not about strengthening your will power (which is finite and subject to fatigue and is influenced by the body’s glucose levels and ironically competes with your ability to think analytically!)

Consistently profitable discretionary traders are, in some sense, world-class performers; they have strong intuitions and they’re able to reliably recognize the difference between those intuitions and some mere hazy, compulsive impulses/urges felt in their body.

our brains took millions of years to evolve biases-generating mechanisms because they worked for solving particular adaptive problems in the past, in our ancestral environment, when we were subject to all sorts of potential hazards.

Unfortunately, given how much our lives have changed in only the past hundreds of years, with the creation and advance of technology, our brains have some serious catching up to do.


Expanding self-awareness means taking what was once subconscious and making it something you are consciously aware of. Often, problems for a trader will persist, even if they’ve tried the will power approach, or they re-did their rules and their plan – they still take impulse trades, still hold losers too long, still exit winning trades much too soon. Why?

The power of the subconscious – that’s where our deepest fears exist. Yes, we are consciously aware of our fear of losing, our fear of being wrong, etc, but on a deeper subconscious level these fears mean something else more significant to us – and that’s what influences our judgment in the heat of the moment and why we continue to make the same mistakes over and over again.

If you want to be a Succesful Discretionary Trader Follow the below Tip

The trader acts as he thinks, he cannot do otherwise. And his thinking will always  be influenced by unconscious beliefs and feelings. Who is not satisfied his trading success, he/she should have the courage to check whether the reasons for this cannot be found in his thought patterns or beliefs.For each of your next hundred trades, write down your thoughts you had during and after a trade.The better you know yourself and your way of thinking, the more targeted you can be to find Solutions to your trading problems.

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