What Is a Trading Strategy?
A trading strategy is a set of rules that tells you when to buy, when to sell, and how much to invest. Having written rules removes emotion. You follow the plan no matter how you feel that day.
Professional traders never trade without a strategy. TickerTrust lets you build your rules and test them before using real money.
Building Your Rules
Every strategy has three parts:
- •Entry Rules: When to buy. Example: "Buy when TrustScore goes above 70 and RSI is below 30."
- •Exit Rules: When to sell. Example: "Sell when TrustScore drops below 50." Always include a stop loss.
- •Position Sizing: How much money to put in each trade. A good rule: never risk more than 2% of your total on one trade.
What Backtesting Does
Backtesting runs your rules against past market data to see how they would have worked. It tells you things like: total return, how often you won, the biggest loss, and average holding time.
But here's the catch: past results don't guarantee future results. Markets change over time. A strategy that worked great in 2015-2020 might not work in 2025. Use backtesting as one piece of the puzzle, not the whole answer.
Common Mistakes
The biggest mistake is "overfitting." This happens when you tweak your rules over and over until the backtest looks perfect. The problem? You've probably just fitted the rules to random noise. In the real world, those exact patterns won't repeat.
Also watch for missing costs. Real trading has fees, bid-ask spreads, and delays. A strategy that makes 10% in a backtest might only make 6% after real-world costs.