Overview
Performance optimization in trading is essential for maximizing profits and minimizing risks. By understanding various trading strategies, traders can select the most effective approaches tailored to their goals. Key components include algorithmic trading, backtesting, and risk management, which tog...
Key Terms
Example: High-frequency trading firms use algorithmic trading to execute thousands of trades per second.
Example: A trader backtests a strategy on past stock prices to see how it would have performed.
Example: Setting stop-loss orders is a common risk management technique.
Example: Traders use technical analysis to identify trends and patterns in stock prices.
Example: A trader sets a stop-loss order at $50 to prevent further losses if the stock price drops.
Example: A risk-reward ratio of 1:3 means for every $1 risked, the potential profit is $3.