The Trading Toolbox. Every market has its best strategy
The first question asked about trading by newbies is often:
“What is a good trading strategy?”
The answer I always give is “IT DEPENDS”.
No other question is more difficult to be answered, talking about Trading than this one. And that’s because in the end, a Trading Strategy that is good “per-se” does not exit, but every different strategy can have a better or a worse fit depending on:
- the asset we are trading
- the market conditions in terms of the market circle, volatility and current liquidity
- the subjective risk appetite profile of the trader
- the capital to be involved
- the tools the trader is comfortable with (eg. discretional trading, algorithmic trading, etc.)
As you can see, it’s impossible to just learn or apply one trading strategy and consider yourself a complete trader. This statement seems to be obvious for the experienced traders but it clarifies to newbies how difficult it is to be able to interpret and master every different market circle and to adjust your trades accordingly to its (often rapidly) evolving conditions.
“The measure of intelligence is the ability to change.”
― Albert Einstein
Let’s put it this way: imagine you are at home, putting together your new shiny IKEA cupboard. The first thing you will need is your toolbox from where you will pick every tool that will fit best for any specific task to be completed. For screws, you will use a screwdriver.. for nails, a hammer.. for wooden planks, a saw.. and so on.. The same happens when we talk about strategies. When markets are trending (both upward and downward), a “trend-following” strategy will be the obvious best fit, instead, when the market is experiencing lateral movements, a “ranging” strategy will be more appropriate. Just like the IKEA piece from our example, the trader will make her own evaluation of the market condition and will choose the strategy accordingly.
We have to look at our trading strategies as our personal tools that we will use depending on all the variables we described above. Experienced traders don’t spend too much time on developing a new strategy every day, they spend most of their time observing how markets evolve and any time they see an opportunity, they know exactly how to execute their orders depending on the trading strategy that they are willing to implement.
Analyzing how a Trading Strategy would work when different patterns emerge in the market will be fast and simple with Coinrule. For instance, our Backtesting Tool will permit you to run a strategy personalizing the time horizon of your interest and in a matter of seconds, you will be able to check how that strategy would have performed. It will be interesting and surprisingly insightful to observe how the same strategy will yield different results just changing the starting and ending dates of the backtest.
Results can vary significantly just changing the time horizon, imagine how many other parameters can impact the results of your strategy! Our Backtesting tool will be completely customizable so that it will be intuitive and fast to test as many strategies as you want in order to create a complete assessment about possible market scenarios on one hand, and about the best strategies to take advantage of them.
A powerful Backtesting tool is a valuable first step towards a successful algorithmic trading strategy!
What is Coinrule
Coinrule allows you to create trading rules that run automatically across your favourite exchanges.
With Coinrule you can easily develop your own trading rules and strategies and set them up to run automatically. It is the “if-this-then-that” for cryptocurrency trading that allows you to plan your crypto trading rather than having to sit for hours in front of charts. Best of all? No coding skills are required, meaning anyone can use Coinrule.