Trading strategies: how they work, styles and comparison
A trading strategy is a set of rules for entering a market, managing exposure and exiting a position. Its value cannot be reduced to its best month: you need to understand how it gains and how it loses.
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The three decisions behind a strategy
A position can be opened manually or by an algorithm. In both cases, the rules should specify the signal, position size and exit conditions. A strong track record does not replace that explanation.
Entry: which movement or price level triggers the trade?
Exposure: how much risk does the account take across all positions?
Exit: when should the strategy take profit, limit a loss or stay out?
Scalping, intraday and breakout mean different things
Scalping and intraday mainly describe a holding period. Breakout describes an entry signal. A strategy can therefore combine intraday trading with breakouts. No style is consistently the best.
| Approach | Principle | What to examine |
|---|---|---|
| Scalping | Short positions, often lasting seconds to minutes. | Spread, commissions and execution quality. |
| Intraday | Positions opened and closed within the same day. | Combined exposure and responses to announcements. |
| Breakout | Entry when price moves beyond a defined area. | False breakouts, volatility and exit conditions. |
What automated trading does
An algorithm applies predefined rules without requiring a click for every order. It still depends on markets, quotes and broker execution. Two accounts can produce different results depending on exposure, connection date, fees and execution conditions. Automation is not a profit guarantee.
Compare like-for-like track records
Start with the period: one favourable month cannot be compared with three full years. Then examine losing months, the depth of declines and recovery time. Distinguish realised results, open positions and simulations. A deposit is not a trading gain.
Explore strategies on FINBASE
The catalogue shows each strategy’s approach, risk management and available track record. Use the comparator to examine profiles over a common period, then read the broker information before joining a PAMM. FINBASE’s selection method is documented separately; it does not predict future results.