The disadvantage of discretionary trading is that it may be influenced by emotions, isn't easily back tested, and has less rigorous risk control.
In the 1990s, various trading strategies were developed by major banks, including statistical arbitrage, trend following and mean reversion.
High-frequency trading strategies that combined computing power, speed, and large databases were gaining more popularity due to their success rates.
[3] After 2000, millions of trades were executed by the largest hedge funds in mere seconds with their black box systems.
[5] By holding a diversified portfolio of individual systematic trading funds, the high level of volatility and manager-specific model risk can be mitigated.