Trading Strategy

AAA

DEFINITION of 'Trading Strategy'

A set of objective rules designating the conditions that must be met for trade entries and exits to occur. A trading strategy includes specifications for trade entries, including trade filters and triggers, as well as rules for trade exits, money management, timeframes, order types, etc. A trading strategy, if based on quantifiable specifications, can be analyzed on historical data to project the future performance of the strategy.

INVESTOPEDIA EXPLAINS 'Trading Strategy'

A trading strategy outlines the specifications for making trades, and includes rules for trade entries, exits and money management. When properly researched and executed, a trading strategy can provide a mathematical expectation for the specified rules, and help traders and investors determine if a trading idea is potentially profitable.

RELATED TERMS
  1. 90/10 Strategy

    An investing strategy that involves deploying 90% of one's investment ...
  2. Trading Plan

    A systematic method for screening and evaluating stocks, determining ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Trade

    A basic economic concept that involves multiple parties participating ...
  5. Investment Strategy

    An investor's plan of attack to guide their investment decisions ...
  6. Backtesting

    The process of testing a trading strategy on prior time periods. ...
Related Articles
  1. Backspreads: Good News For Breakout ...
    Options & Futures

    Backspreads: Good News For Breakout ...

  2. Interpreting A Strategy Performance ...
    Trading Systems & Software

    Interpreting A Strategy Performance ...

  3. Top 10 Rules For Successful Trading
    Active Trading

    Top 10 Rules For Successful Trading

  4. Playing Penny Stock-Like ETFs
    Stock Analysis

    Playing Penny Stock-Like ETFs

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center