Categories of strategies

Discussion in 'Strategy Development' started by pisco, Apr 23, 2013.

  1. pisco

    pisco

    Hello guys,

    I am at the beginning of my trading journey and i was wondering it strategies could be grouped Info different categories?(like Trend following system ect.)

    In which trading categories can strategies be grouped?

    I appreciate your answer!
     
  2. mspkash1

    mspkash1

    1. Trend trading
    2. Reversal Trading (this and trend trading doesn't get along well so better to do one or the other)
    3. impulsively take a trade depending on how you 'feel' and then hope and pray you make a penny
     
  3. At a first stab, I'd say all strategies can be grouped into neutral (arbitrage) and absolute, and within absolute there is fundamental and technical, and within technical there is reversion to mean and momentum.
     
  4. etfarb

    etfarb

    and within fundamental....

    There's relative value?
     
  5. In practive, I would guess most value managers are probably practicing "relative value," given the imperative to be fully invested. But is that a strategy? I would think any strategy is also an "absolute return" strategy.

    Maybe "directional" is better than absolute because "absolute" already has a specific meaning.
     
  6. Handle123

    Handle123

    I use to believe there were two types of trading, trend and counter-trend, but now I have settled on just one type- trend. Every trade I have entered into, I look for it to trend in my direction otherwise why would I put it on? Now granted, I use a boatload of money management rules to put the percentages on my side and I use options to hedge some trades, but bottom line, I take trades for them to become profitable.
     
  7. kut2k2

    kut2k2

    +1

    Good grouping.
     
  8. Great Question!! Your strategies will depend upon what info/technology you have access to, characteristics of the markets you're trading and your competitive edge. Not all strategies fit every market so you must know the characteristics of each and not all strategies work in every time frame. For instance, on a daily chart, ETF's trend more than their components (I'll leave it up to you to find out why). If you have access to Specialist books, DOM etc., then you'll have new strats. If you trade options then you'll want to understand relationships between implied and realized ordered parameters, etc.

    As you grow to understand the markets, then you realize that some characteristics are actually something completely different. At that point, your strategies change as well as the development of them, etc.
     
  9. Sergio77

    Sergio77

    Momentum, mean reversion and trend following. This is standard classification. But again, nothing is standard in trading.
     
  10. mark_mm

    mark_mm

    I would categorise trend following as a momentum strategy. So you have momentum or MR. i.e. long or short volatility.
     
    #10     May 16, 2013