What defines a discretionary trading system?

A discretionary trading system is characterized by the trader's ability to make decisions based on intuition, experience, and market conditions rather than a fixed set of rules or algorithms. In this approach, traders assess the market and use their judgment to enter and exit positions, adapting to changing circumstances and incorporating subjective elements such as personal experience and market sentiment. This flexibility allows discretionary traders to take advantage of unique opportunities that may not be captured by automated systems or strict methodologies.

The emphasis on intuition distinguishes discretionary trading from algorithmic systems, which rely on predefined criteria for decision-making. Additionally, discretionary trading does not inherently focus on long-term investments or restrict itself solely to fundamental analysis; rather, it encompasses a broader range of analysis techniques and trading timeframes, tailored to the trader's strategy and market outlook. Therefore, the defining characteristic of a discretionary trading system is its reliance on the trader's judgment rather than a rigid framework.