<aside> 💡 Notes: The questions and answers are compiled by the BuddyTrading team. Any contributions on the content can be sent to email [email protected]

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In finance, a trading strategy is a fixed plan that is designed to achieve a profitable return by going buy or sell in markets.

A trading strategy is based on predefined rules and criteria used when making trading decisions.

For every trading strategy one needs to define assets to trade, entry/exit points and money management rules. Bad money management can make a potentially profitable strategy unprofitable.

Trading strategies are based on fundamental or technical analysis, or both. They are usually verified by backtesting, where the process should follow the scientific method, and by forward testing (a.k.a. 'paper trading') where they are tested in a simulated trading environment.