Discretionary trading
Trading with a framework of rules but leaving the final judgement to the trader.
Full explanation
A discretionary trader still works from defined setups and risk limits, but decides in the moment whether the context justifies the trade. Two experienced traders using the same framework may reasonably take different trades on the same day.
Discretion adapts well to changing conditions and to context that no rule captures, such as an unusual news backdrop.
It is also harder to review. Without a written note explaining why each trade was taken or skipped, discretionary results look like noise.
Why traders watch it
Most traders are discretionary whether they admit it or not. Naming it forces you to keep the risk rules fixed even when the entry decision is judged.
Trading considerations
- Keep risk and position sizing mechanical even when entries are judged.
- Write one line per trade explaining the judgement call.
- Discretion should choose between valid setups, not invent new ones.
Educational guidance only — never a trading signal or recommendation.