What a strategy actually is

A trading strategy is a rule. That’s genuinely all it is.

Here’s a complete one, and a famous one:

Buy when the average price over the last 50 days rises above the average over the last 200 days. Sell when it falls back below.

That’s it. No prediction, no opinion about the company, no view on interest rates. Just a condition that’s either true or false today, and an instruction for each case.

Why write it down at all

Because the alternative isn’t “no strategy” — it’s a strategy you can’t inspect. If you buy when something feels cheap and sell when you’re nervous, you still have rules; they’re just invisible, inconsistent, and impossible to check against what actually happened.

Writing the rule down buys you three things:

• It can be tested. You can ask what this rule would have done over the last ten years.
• It can be measured. When it loses money, you can tell whether it followed the rule or you did.
• It runs when you’re not there. Which is the entire point of BotStock.

What a strategy is not

It isn’t a prediction. The 50/200 rule above has no idea where the market is going, and it’s wrong frequently — it buys late, it sells late, and in a choppy sideways market it does both repeatedly and loses a little each time. It survives because the occasional long trend pays for all of that.

That pattern is normal. A good strategy is usually not one that’s right often; it’s one whose wins are big enough to cover its losses, applied consistently enough that the maths gets a chance to work.

Starting out

In BotStock, a new account starts with three working strategies — one that follows a trend, one that buys dips, one that buys breakouts — written out in full with a comment on every line saying what it means for the trade. That’s a deliberately unambitious starting point, and a good one: change one thing, see what it does, keep it or put it back. The rule you started from is kept as version 1, so there’s always something to compare against.