A trading strategy is your guiding principle right in the heart of trading – i.e. when you are opening and closing positions. There might be some other higher scale and high resolution principle such as trading style or approach. But a trading strategy is right at the meat of things!
This is precisely why a trading strategy is so crucially important. Although there are countless trading strategies already available out there for you to choose from, there is another route that you can choose. You can develop your own trading strategy. In this method you take the matter into your own hands and develop a trading strategy that is particularly applicable to your own trading conditions.
In this article we will show you how you can develop a trading strategy with the help of the well-known platform TradingView and also the criteria for a good trading strategy.
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What is a trading strategy?
Before we show you how to make a trading strategy with TradingView, let’s discuss trading strategy itself. There is a lot of confusion when it comes to trading strategy and also trading style. These two terms are indeed different.
A trading style is much more comprehensive in its scope of analysis and entails the bigger picture stuff. It is the overall approach to trading. We have for instance day trading or swing trading.
But a trading strategy is more precise and detailed in its approach to trading. It is how we execute every single trade in the market. It is about the way trades are carried out. It is about calculating the right entry point and also the right exit window.
This is exactly where the importance of a trading strategy can be seen. It directly and instantly impacts our trading decisions and the outcome of our trading operations in the market. Now let’s take a look at the most prominent features that a good trading strategy should have.
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What are the criteria for a good trading strategy?
If you indeed have decided to create your own trading strategy, then you need to know what a good strategy looks like. In other words, you must know the factors and criteria that are involved in a proper and profitable trading strategy.
There are perhaps numerous aspects you must keep in mind when developing a trading strategy. But among, the most important features are the following:
- It must be aligned with your trading style. So the first thing you need to look at is your own trading style. Are you a day trader, a scalper, a swing trader, or a position trader? Whichever one of these trading styles you have, you need to develop your trading strategy based on that.
- Your trading strategy should be flexible enough to be able to work under the changing market conditions and not miss out on opportunities. This means, for instance, its stop loss should not be too rigid to miss out on opportunities.
- On the other hand, your trading strategy should be rigid enough to withstand the unfavorable changes in the market. This means, for instance, your stop loss levels should be as such that they do not allow for your positions to sustain unnecessary losses.
- It needs to have an extensive and comprehensive approach to risk management, including stop losses, risk tolerance, risk levels, calculation of the right lot size and position size.
- Finally, your trading strategy must yield positive and profitable results in the back testing process that you must take through before actually using it under real conditions in the market.
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Step by step guide on developing your own trading strategy on TradingView
Alright now let’s turn to the platform that started this whole article – TradingView.
TradingView is one of the most well-known platforms in the world of trading and financial markets. With hundreds of built-in technical indicators and countless charting tools for the best representation of market data, it has established itself as the number one choice for most traders. Among the many user-friendly and user based services that TradingView offers, perhaps a unique one would be its programming language known as Pine Script.
With the help of Pine Script users can create their own trading indicators and trading strategies.
When you create a trading strategy with Pine Script, you can directly add it to your trading account and use it on TradingView.
To start you can read the user manual created by TradingView which easily and simply explains how to use Pine Script so you can quickly learn the syntax of this straightforward programming language.
There is even a dedicated section known as the simplified section where you can begin to learn how to work with Pine Script in a highly assisted setting.
The way you can access the proprietary editor of TradingView and begin writing code with Pine Script is quite simple as well.
First of all, login to your account and then go to the chart and from there you can open the Trading Panel.
In the Trading Panel you can find an option known as Pine Editor which is where you can begin writing Pine Script code immediately.
Conclusion
As a trader you can make your own trading strategy in order to have a strategy that is completely in line with your own trading needs and conditions. There are different ways in which you can create a trading strategy. One of the best ways to do so is to use the platform TradingView. In this article we discussed the definition of a trading strategy, the factors involved in a good trading strategy, and we also presented you with a step by step guide on how to make your own trading strategy with the help of TradingView.
