For Business

Trading Strategies

What Is a Trading Strategy

A trading strategy is a set of rules written before the market opens — which market and chart, a rule for going in, a rule for coming out, and how much — each one something the chart answers yes or no, the same way for anyone who asks. This paper shows you one rule checked on two real days of gold in April 2025, the idea as a recipe card, the rule drawn on the daily chart, the same rule asked every day for three months with the answers counted, and where a written strategy lives on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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One rule, two real days

A trading strategy is a set of rules, and a rule is something a chart can answer yes or no. Take one: the day's close is above the average of the last twenty closes. On 7 April 2025 gold closed at 2982.22 and the average was 3033.44, so the answer is no. On 17 April the close was 3326.16 and the average 3115.11, so the answer is yes. Anyone with the same chart gets the same answer. That is the difference between a rule and an opinion, and a strategy is made of rules.

A recipe card

Picture a recipe card with four lines. What: which market and which chart, say gold on daily bars. When in: a rule the chart answers yes or no. When out: a rule for closing, written the same way. How much: the size of each trade, as a fixed share of the account. The card is written before the market opens. A recipe is not a guess about tonight's dinner; it is the same steps in the same order every time, and the day only fills in the yes and the no.

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