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. Backtesting

    The process of testing a trading strategy on prior time periods. ...
  4. Forecasting

    The use of historic data to determine the direction of future ...
  5. Technical Analysis

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

    A basic economic concept that involves multiple parties participating ...
Related Articles
  1. Options & Futures

    Backspreads: Good News For Breakout ...

  2. Trading Systems & Software

    Interpreting A Strategy Performance ...

  3. Active Trading

    Top 10 Rules For Successful Trading

  4. Trading Strategies

    How do I create a trading strategy with ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center