Wednesday, April 15, 2009

Trading strategy

In finance, a trading strategy is a predefined set of rules for making trading decisions.

Traders, investment firms and fund managers use a trading strategy to help make wiser investment decisions and help eliminate the emotional aspect of trading.

A trading strategy is governed by a set of rules that do not deviate.

Emotional bias is eliminated because the systems operate within the parameters known by the trader.

The parameters can be trusted based on historical analysis (backtesting) and real world market studies (forward testing), so that the trader can have confidence in the strategy and its operating characteristics.
Posted by edz at 12:19 AM

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