There are five types of Forex trading systems, mechanical and discretionary systems. 3 The trading signals are mainly based off technical analysis applied in the mechanical systems in a systematic way. On the other hand, discretionary systems use experience, intuition, or judgment of inputs and outputs. But what produces better results? Or more importantly, what better suits your trading style? These are the answers we try to answer in this article.let us first analyze the pros and cons of each approach system.mechanical systemsbenefitsThis type of system can be automated and retest 552 efficiently.It has very rigid rules. Or there is a trade or there is not.mechanical operators are less susceptible to emotions than discretionary traders.consMost forex traders backup trading systems incorrectly. To produce accurate results you need tick data.The currency market is always changing. The Forex market (and all markets) has a random component. The market conditions may look the same, but never the same.A system that worked successfully the past year does not necessarily mean it will work this year.discretionary systemsbenefitsDiscretionary systems are easily adaptable to new market conditions.business decisions are based on experience. Traders learn to see which trading signals have a greater chance of success.consThey can not back tested or automated, as there is always thought to take a decision.It takes time to develop that are required to successfully operate and monitor operations experience a discretionary manner. In the early stages this can be dangerous.Now, which approach is better for Forex traders? That best suits your personality. For example, if you are a trader that finds it difficult to follow their trading signals, you're better off using a mechanical system in which your judgment will not play an important role in the system.If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts unwanted scenarios, it is better to operate mechanical systems, because they just follow what your system is you, go short, go long , closing a trade. Another decision to be made.On the other hand, if you are a disciplined trader, then it is better to use a discretionary system, because discretionary systems adapt to market conditions and be able to change your trading conditions as the market changes. For example, you have a target of 60 pips on a long trade. But the market suddenly starts trending upward very strong, you can move your target to say 100 pips.Does this mean that trading a discretionary system has no law? This is definitely wrong. Negotiated discretionary systems means that once a trader finds his / her institution decides to do so by the operator. But every trader still has some rules that must be followed, such as the size of the position, the conditions that must be met before thinking about entering the market, and so on.
