Strategy Trading
Strategy trading is the process of designing a set of trading rules to systematically enter and exit the market, based primarily on price action and/or volume and open interest. In TradeStation, a trading strategy consists of a complete set of Long and/or Short entry and exit rules.
Trading strategies are based on technical analysis. Technical analysis is based on the idea that price patterns can repeat and that it may be possible to determine trading opportunities based on price movement and pattern repetition.
TradeStation is the ultimate tool that allows you to follow individual financial instruments (stocks, indexes, etc.) in an attempt to find these potential opportunities. Trading rules may be described using TradeStation's proprietary EasyLanguage. When applied to a chart, TradeStation will use your choice of entry and exit rules to identify when trades might have occurred and provides you with a wide array of performance measures and reports so that you may evaluate how effective your strategy rules were throughout the entire history available on the chart.
In general, the process of creating a trading strategy in TradeStation can described as including the following:
- One or more trading ideas that lead you to design of a set of entry and exit rules
- Back-testing your rules on historical data to determine strategy performance criteria
- Refining your rules and identifying input values that may help you to optimize strategy performance
- Running your strategy on real-time data to generate strategy orders
- The option of automating order notification and, possibly, market execution based on your strategy orders