Continue reading...1. Introduction
A trading strategy is simply a pre-determined set of rules that a trader has developed to guide their trading. The advantages to the trader of developing a trading strategy are:
– It removes emotions from trading. A trader following a strategy knows what to do whatever the market does. A trader that does not have a strategy tries to make decisions when the market is open and is liable to become emotionally attached to positions. They may experience panic and indecision when the market does not move in their favour, as they do not have a prepared response.
-Saving time. Developing a trading strategy that has an edge is hard work. However, once developed the rules can easily be automated freeing the trader from having to watch charts all day and allowing time to develop further strategies.
However, developing a trading strategy that is effective can become a complex process. There are computer programs available (such as TradeStation...
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