Trading Strategy Definitions

Automated Trading uses computer algorithms to execute trades based on predefined rules and conditions. It eliminates emotional decision-making, increases efficiency, and allows traders to implement complex strategies across multiple markets with minimal oversight.

Breakout Trading is a strategy that involves entering trades when the price moves outside a defined support or resistance level. Traders anticipate continued momentum in the breakout direction, seeking quick profits from strong price movements.

Day Trading involves buying and selling financial instruments within the same trading day. The goal is to profit from short-term price fluctuations. Day traders often use leverage and focus on technical analysis to identify entry and exit points.

Discretionary Trading relies on the trader’s judgment and experience to make decisions rather than following strict rules or algorithms. It allows flexibility but can be prone to emotional biases and inconsistent results.

The exact conditions under which you would enter the trade.

The exit trigger is the exact rule(s) under which you will exit / close a trade. Exit triggers may be any of the following:

• Trailing stop
• Time stop
• Profit stop
• Indicator exit
• Price Pattern

High-Frequency Trading (HFT) is an automated trading strategy that uses powerful computers and algorithms to execute a large number of orders at extremely high speeds. HFT aims to capitalize on small price discrepancies across markets.

The level at which you would admit you are wrong and close a trade if it moves against you. Usually calculated in one of three ways:

• Logical chart based stop using support or resistance levels
• Volatility based stop using a certain multiple of ATR or Standard Deviation from the entry price
• Percentage based stop set to be a certain percentage away from the entry price.
• Indicator based stop set using an indicator such as a moving average, Parabolic SAR or other indicator to calculate the stop value.

Mechanical Trading Systems are rule-based strategies designed to eliminate emotional interference from trading decisions. These systems follow strict criteria for entry, exit, position sizing, and risk management to ensure consistency and objectivity.

Mean Reversion is a strategy based on the assumption that prices will eventually return to their historical average or equilibrium level. Traders profit by buying undervalued assets and selling overvalued ones, anticipating price normalization.

Momentum Trading involves buying assets that are trending upward and selling those trending downward. The strategy is based on the idea that strong price trends are likely to continue in the same direction for a period of time.

Pair Trading is a market-neutral strategy that involves buying one asset and simultaneously selling a related asset to profit from the price difference. It seeks to exploit relative value discrepancies while minimizing exposure to broader market movements.

Position Trading is a long-term strategy where traders hold assets for weeks, months, or even years. It relies on fundamental analysis, trend-following systems, and macroeconomic factors to identify profitable opportunities.

This is when you add to your position as it moves in your favour. This is done to capitalise on the trend that you have identified.

Quantitative Trading uses mathematical models, statistics, and algorithms to identify and capitalize on trading opportunities. It emphasizes data analysis, backtesting, and rigorous testing to ensure consistency and profitability.

This means to gradually buy shares, usually in regular sized blocks until you have built up your full position in a stock. This can be done at regular time or profit intervals, or by building your position when certain price patterns / indicator signals occur.

This means to gradually sell shares, usually in regular sized blocks until you have closed your full position in a stock. This can be done at regular time or profit intervals, or by building your position when certain price patterns / indicator signals occur.

Scalping is a short-term trading strategy focused on making small, frequent profits by executing numerous trades within minutes or seconds. Scalpers rely on tight spreads, high liquidity, and rapid execution to minimize risk.

These are the conditions under which you would consider entering a trade. For example in long side trend following, you may have a setup that requires a strong trend to be in place, low volatility and a slight pullback in prices.

Statistical Arbitrage involves identifying and exploiting statistical inefficiencies between related financial instruments. It uses quantitative models to detect temporary mispricings and profit from price corrections over short time frames.

Swing Trading aims to capture price movements over days or weeks by taking advantage of market “swings.” Traders seek to profit from upward or downward trends before they reverse, using technical and fundamental analysis.

Systematic Trading relies on pre-established rules and algorithms to make trading decisions. It eliminates emotional biases, increases consistency, and allows for scalable and repeatable trading processes across various markets.

A method of exiting which is related to how long since the trade was opened. For example, a 40 day time stop means that the trade will be closed after 40 days no matter what the share price.

Trend Following is a strategy that seeks to profit from sustained market trends. Traders enter positions when a trend is established and hold them until signs of a trend reversal appear. It is commonly used in stocks, forex, commodities, and futures markets.