Trading strategies

Trading strategies, a framework to enter and exit the markets, vary dependent on the trader. Despite the differences, each trading plan must display definite rules of engagement for both entry and exit signals. This defines the setup.

A setup is a repetitive pattern that provides a high-probability signal to trade. Whilst recommended to note each rule in detail, a simplistic approach is often best. The last thing you want to do is scrutinise long-winded notes before entering a trade.

Having an edge, a technique, observation or approach that creates an advantage, that has been back tested enhances your odds of success in the live markets, assuming you have the discipline to follow the trading plan.

It is also quite common for traders to have more than one strategy. Although having alternative methods has benefits, newer traders may want to consider focusing on one approach to begin with.