Mechanical Trading

Mechanical trading means writing down exact rules and following them like a recipe: "Buy when the 20-period average crosses above the 50, stop 30 pips below, take profit at 60." No hunches, no "this time feels different." The rules can be followed by hand or coded into a robot, such as an expert advisor.

The big upside is consistency and the ability to backtest. The big trap is falling in love with rules that only worked on past data. It is the opposite of discretionary trading, where the trader's judgment makes the final call.