Objective Trading and Subjective Trading

Objective Trading and Subjective Trading

In today’s article, we’ll learn about objective and subjective trading. In short objective traders will usually follow a series of rules that guide them through their trading journey and decision-making process. These traders usually plan their buy and sell decisions in advance. Subjective traders, on the other hand, don’t follow a guide. They are flexible with the market conditions and adapt to what comes their way. Their decisions are based on what they see as true of any trading opportunity. In contrast to objective traders, subjective traders tend to be more vulnerable to behavioral finance biases and usually go forth by emotion, not reason.

Let’s go more into depth on these two methods of trading.

Objective Trading:

This form of trading is also commonly referred to as rule-based trading. It is the simplest trading method because of the set of rules the traders go according to. It serves as a guide for the trader, including a trade entry-exit time frame, order types, and other information.

The trader waits until his requirements for initiating a deal are met. He enters a market position, then enters “take profit” and “stop-loss” orders to control his ultimate withdrawal from the transaction. After that, it’s just letting the transaction do its work. When his stop-loss order is activated, it either meets his profit objective or is taken out of the trade.

This method of trading is usually the most ideal for new traders. Being that it provides the trader with a set of rules reduces the stress for a trader without trading experience.

Subjective Trading:

Subjective trading is a method more relevant for traders with experience. Experienced traders are usually more familiar with the market and its price action.

Subjective trading is more than just trading based on emotions. They make trading judgments based on objective market analysis. They do not follow a set of rules. Instead, they evaluate each trading opportunity with the most recent price action and their feeling of the market from all their years of experience.


In conclusion, there is not any right or wrong trading method. It is merely which one works for you and the amount of experience. Objective trading is an ideal approach for beginners, and subjective trading depends on the trader’s skill, which comes after years of experience. Each method works better for another person. As long as you feel comfortable with the chosen method, that’s what matters.

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Objective Trading and Subjective Trading

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