The strategy trader trades by the rules that make up his business strategy and which have been historically tested till proven sound.
Being a trader is not easy. One must have a complete understanding of his or her trading platform as well as what goals they are aiming to achieve. To this end traders must take the initiative to understand basic trading principles and implement them professionally so as to be able to trade forex profitably. Trading using a sound strategy helps traders to blend their experience with trading principles and common sense irrespective of the trading platform they use.
Trading as a Business – The Strategy Trader:
Traders face tight competition day in day out. However, for one to thrive in this business, it is vital that the trader understands the trading landscape. This is why it is essential to have a complete understanding of your market. It becomes much easier to make wise and informed decisions when to trade and when to close a trade when one understands the market landscape. More than that once the trader understands his market and has learned all the rules he can then determine the most profitable opportunities and trade in an environment that offers more chances of trading profitably with fewer risks.
The strategy trader is the trader that has a strategy which he trades. Everything the trader does is objective, nothing is subjective, all his entry and exit points have objective criteria and the criteria has been corroborated with quantifiable data and tested historically. Strategy traders don’t have any imagination or intuition or at least they don’t allow that to get in the way of their method of trading which is strictly by their rules. These rules make up the strategy and the strategy trader will never deviate from the rules that make up his strategy, except where the trader decides that the current strategy is not profitable enough and therefore designs a new strategy.
There are rules for every possible happening. If your strategy tells you to sell, then you sell or buy if your strategy tells you to do that. Whatever you read in the financial press, whatever fundamental analysts say or whatever tips or advice is given to you by your broker, you don’t take any notice of it, unless of course your rules coincide with a particular piece of advice.
Strategy traders always stick to their rules as more often than not these rules have been tried and tested and survived the historical data tests. A trader might become emotional when he sees what the markets are doing but the one thing the strategy trader never does is to allow his emotions to override his rules and be the cause of a bad decision. The strategy trader fully understands the value of quantifiable data, data he can trust, data that absolutely correlates to the market. His strategy is based on this data because it is immensely measurable. In fact any data that has a measurable pattern is quantifiable unlike random events which occur once in a blue moon, which are not quantifiable. Anything that is measurable can be incorporated into a trading strategy.
Where the technical trader is always trying to price correlate data the strategy trader seeks out quantifiable data and tests it in relation to historical prices. In this way the strategy trader puts together a sound set of rules that mirror sound business practices which allow him to make money.
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