Module 28: Building a Trading Strategy
Key Takeaways
- A strategy is a written set of objective rules.
- Define entries, exits, risk and management clearly.
- Rules remove emotion and make results measurable.
Entry rules
Specify exactly what must be true to enter: market and timeframe, trend condition, the level or zone, and the confirmation signal. Example: “On the 1h, in an uptrend (HH/HL), buy a bullish engulfing candle at a tested support level.” No ambiguity — you should be able to spot the setup instantly.
Exit rules
Define where you take profit (fixed R:R, next major level, or trailing) and where you’re wrong (stop placement beyond structure). Decide in advance — never improvise exits under pressure.
Risk rules
Set risk per trade (e.g. 1%), a maximum number of open trades, a daily loss limit, and which news events to avoid. These guardrails protect your capital across a losing streak.
Trade management
Decide whether you scale out, move your stop to breakeven after 1R, or trail behind structure. Consistency in management is as important as the entry itself.
Putting it together
Write your strategy on one page. If you can’t state it in a few clear rules, it’s not ready. Then backtest it (Module 27), forward-test on demo, and only then trade it live with small size.
One well-defined strategy executed consistently beats ten vague ideas. Master one before adding another.
Frequently Asked Questions
Positive expectancy across a large sample in backtesting and demo, plus rules you can follow without stress.