In trading circles, discretion often gets a bad reputation. Many believe that discretionary trading — where the trader makes decisions based on judgement rather than fixed rules — is just another word for randomness. This leads to the idea that systematic trading is the only path to consistency, while discretion is unreliable, impulsive, or even dangerous. But is that really true? This article explores why discretion is not the same as randomness, and how skilled discretionary traders operate with structure, intent, and edge.

What is discretionary trading?

Discretionary trading involves using personal judgement, experience, and contextual awareness to make trading decisions. It’s often contrasted with systematic or algorithmic trading, where rules are predefined and executed automatically or without interpretation.

Discretion doesn’t mean guesswork — it means flexibility within structure. A discretionary trader might:

• Recognise the same setup forming but decide to pass based on market tone
• Exit early due to lack of momentum
• Size down after a string of losses
• Wait for a key news event to pass before entering

These decisions are intentional, not random.

What is randomness in trading?

Randomness in trading means taking trades without a consistent basis, repeatable logic, or measured risk. It usually results from:

• FOMO (fear of missing out)
• Emotional reactions to wins or losses
• Chasing moves with no clear entry signal
• Constantly changing strategy with no structure
• Ignoring plans and improvising mid-trade

This is not discretion — it’s disorder. The key difference is that discretion involves informed choices, while randomness is chaotic and reactive.

Why discretion gets confused with randomness

1. Lack of transparency:
Discretionary decisions are harder to explain or backtest. Without clearly written rules, it appears to outsiders that the trader is improvising.

2. Inconsistency among new traders:
Beginners often claim to be “discretionary” when they’re actually trading emotionally or without structure. This blurs the line between discretion and randomness.

3. Harder to teach or replicate:
Discretionary trading is built on experience, screen time, and context. It’s less mechanical, so harder to model — making it seem less reliable.

4. Discretionary traders often can’t articulate their edge:
If a trader can’t explain why they took a trade or made a decision, it may be random — or it may be subconscious intuition that hasn’t yet been clearly defined.

How professional discretionary traders operate

1. Structure + flexibility:
Great discretionary traders follow core rules: risk per trade, risk-reward minimums, specific setups. But they allow room for human judgement when conditions deviate from the textbook.

2. Situational awareness:
They consider factors like volume, volatility, time of day, macro context, and news flow — even when the chart setup looks valid.

3. Emotional discipline:
They’ve trained their psychology to avoid emotional reactions. Their discretion is calm, measured, and strategic — not impulsive.

4. Consistent journaling and review:
Top discretionary traders track all their trades, noting when and why they deviated from the setup. Over time, this data improves judgement and sharpens instinct.

5. Statistical awareness:
They may not backtest in a traditional way, but they understand their edge across market conditions, trade types, and execution decisions.

When discretion becomes dangerous

Discretion turns into randomness when:

• There’s no plan to begin with
• Decisions are justified after the fact
• Risk rules are ignored “just this once”
• Trades are taken based on feelings, not patterns or probabilities
• There’s no consistency in setup selection, size, or exit logic

Without a core system or risk framework, discretionary trading devolves into chaos.

Conclusion

Discretion is not randomness — unless it’s misused. Properly applied, discretion is structured flexibility that allows experienced traders to navigate real-world complexity better than rigid systems alone. The key is intention, discipline, and process. Great discretionary traders are not making it up as they go — they’re making fast, informed decisions rooted in a deep understanding of market behaviour.

To master the art of discretion without falling into randomness, enrol in our Trading Courses at Traders MBA — where strategic judgement meets structured edge.