What Is a Trading Strategy? A trading strategy is a method of buying and selling in markets that is based on predefined rules used to make trading decisions. KEY TAKEAWAYS A trading strategy can be likened to a trading plan that takes into account various factors and exigencies for an investor. A trading strategy typically consists of three stages: planning, placing trades, and executing trades. At each stage of the process, metrics relating to the strategy are measured and changed based on the change in markets. Most trading strategies are based on either technicals or fundamentals, using quantifiable information that can be backtested to determine accuracy. Understanding Trading Strategies A trading strategy includes a well-considered investing and trading plan that specifies investing objectives, risk tolerance, time horizon, and tax implications. Ideas and best practices need to be researched and adopted then adhered to. Planning for trading includes developing methods ...
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