Mechanical Trading
Definition
The strictest form of systematic trading: every decision, including whether to trade at all, follows written rules with no exceptions, so the same inputs always produce the same trade.
Example
“Because his system is mechanical, he took the fifth signal after four straight losses without hesitating.”
Detailed Explanation
A mechanical trading system leaves nothing to judgment. Two people running it would take identical trades, which makes it fully testable and removes emotional overrides such as taking profits early or moving a stop. It can be run by hand from a printed checklist, or handed to software, at which point it becomes algorithmic trading. The trade-off is flexibility: a mechanical trader can't step aside for an unusual event unless a no-trade rule was written in advance, such as avoiding the minutes around a scheduled economic release. Mechanical trading suits traders who know they override their rules too often.
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