Systematic trading (also known as mechanical trading) is a way of defining trade goals, risk controls and rules that can make investment and trading decisions in a methodical way.[1]
Systematic trading includes both manual trading of systems, and full or partial automation using computers. Although technical systematic systems are more common, there are also systems using fundamental data such as those in equity long:short hedge funds and GTAA funds. Systematic trading includes both high frequency trading (HFT, sometimes called algorithmic trading) and slower types of investment such as systematic trend following. It also includes passive index tracking.
The opposite of systematic trading is discretionary trading. The disadvantage of discretionary trading is that it may be influenced by emotions, isn't easily back tested, and has less rigorous risk control.[2]
Systematic trading is related to quantitative trading. Quantitative trading includes all trading that use quantitative techniques; most quantitative trading involves using techniques to value market assets like derivatives but the trading decision may be systematic or discretionary.