Discretionary Trend Following?

I received some feedback from a gentleman who had nothing but nice words to say for my writing. We exchanged several emails, but I am not sure he completely got trend following. He said:

“I cannot automate, as in use a computer, the discretionary entry and exit rules I have. There is no doubt about that. At the same time, if you were to look at my past trades, there is an obvious uniformity to them. In essence I have two entry rules: a breakout of a clearly-defined price pattern (mostly Bull/Bear Flags and Triangles), OR a support/resistance bounce off of a Fibonacci retracement level which is occurring within a defined price pattern (flags tend to pull back to a 38% fib level before running higher/lower). Thus these rules are repeatable…I have consistently found that these entry ‘rules’ are more clearly defined as entry ‘methods’, which can be taught to and repeated by others.”

If a rule is repeatable and teachable, why can’t it be programmed or made systematic? Additionally, I am unclear as to what Fibonacci retracement means exactly. He continued:

“Keep in mind that I am not championing a discretionary entry/exit method as better than a systematic one. I am simply trying to give it its due. In my classes I will bring up a stock and ask the class to write down where they see support and resistance and invariably there are as many answers as there are students (though sometimes there is a general consensus too). How do I deal with this variance? Well, to explain that I need to explain some core beliefs to you. I believe that not everyone can follow a set system. Me, for instance. I am the type of person who loves creativity, I thrive on it. I throw away the directions on how to put together my computer desk as soon as the package is opened and go at it on my own. Others LOVE systems and can follow them. They are less creative, and more into clearly defined rules. It is kind of akin to the left vs. right-brained argument. Yet both personality types can be successful traders. The point is HOW each type will trade. We can split traders into two types: fundamental and technical. I am simply making the argument that those categories can be further split, and I am really only interested in technical trading. But next technical trading can be split into two further camps: discretionary vs. system. Dan Zanger is the shining example of a successful discretionary trader, and your book highlights the shining examples of system traders. Just as fundamental traders criticize and mock technical traders and vice versa (Victor Niederhoffer’s criticisms of your book come to mind), I notice that discretionary and systems traders have a similar attitude toward one another. Yet both make money! My point is that a genuine artist would go crazy trying to do a paint by number (a discretionary type has trouble following systematic rules) yet an builder could never build a building with plans by an architect who adds ‘just wing it’ to his plans (a systematic type relies on clearly defined rules). I know that the performance of my fund is too short to really make the case. I defer to Dan Zanger (and I think Paul Tudor Jones is largely discretionary as well). As such, its funny because as much as I admire Zanger, he is WAY TOO discretionary for my tastes! He uses discretion in his position size, which I do not condone. I only use discretion with my entry and profit exits. Everything else is purely systematic…I hope this is somewhat clear. I got the impression that you would enjoy this sort of debate.”

With all due respect, I just don’t really understand your debate. The trend followers I write about all have performance data to examine. Decades of it. Where are these ‘technical discretion’ traders? Where is their data to make comparisons? Check out data in my expanded edition of my book (Nov 05). Where is this type data for the traders/style you mention? I am always up for a debate, sure, but where is the data?