What Is Trading strategy?
In quantitative finance, a trading strategy is a fixed plan that is designed to achieve a profitable returns for its investors.
Common trading strategies include:
Index investing
A trading strategy may look to optimise cumulative profit or risk-adjusted return.
Further strategies can be classified by their activity and risk profile as
Directional strategies that are volatile
The trading strategy can be automated as algorithmic trading and thus become automated trading strategy. Automated strategies can be e.g.
Technical indicator-based strategies
Trend-following
Market-making (see AMM for decentralised finance)
Arbitrage
Scalping
Portfolio construction model or tactical asset allocation
Trading strategies can be objectively compared to each other. This is called benchmarking.
Trading Strategy can also refer to Trading Strategy Protocol which is a solution for creating trading strategies for decentralised finance.
See also