What Is Rule-Based Trading and Why Does It Work
Rule-based trading removes discretion from execution. Predetermined criteria dictate every entry, exit, and position size. No judgment calls. No overrides. Just rules.
The Answer
Rule-based trading is a methodology where every trading decision is governed by predetermined, testable criteria. Entry rules define when to buy. Exit rules define when to sell. Position sizing rules define how much. Stop loss rules define maximum risk. There is no gray area. No 'it depends.' No 'I feel like the market is going to reverse.' The rules either trigger or they do not. When rules are automated, execution becomes deterministic. The same conditions always produce the same action. This eliminates execution leak entirely.
What Is Your Execution Leak Costing You
Most traders have never calculated this number. It takes 30 seconds.
CALCULATE YOUR LEAK