This article investigates the concept and the construction of judicial discretion. The strengths and weaknesses of both Dworkin and Hart are analysed, and in view of these, it is argued that a full picture of judicial discretion is between the two extremes. Thus, a moderate theory of judicial discretion is maintained which is based on achievements by Robert Alexy (2002b). The article develops a balancing model of discretion and relates it to the theory of legal argumentation. The limits of discretion and the relation between structural (strong) and epistemic (weak) discretion are addressed in detail, both with illustrations from the jurisdiction of the German Federal Constitutional Court.