What is an arbitrary trading strategy?

An arbitrary trading strategy is characterized by relying on irrational methods for making trading decisions. This typically involves making trades based on emotional responses, whims, or inconsistent reasoning rather than following a structured plan or analysis. Traders employing an arbitrary approach may react to market movements sporadically or make decisions influenced by personal biases rather than adhering to logical analysis or established trading principles.

In contrast, a trading strategy based on fundamental analysis seeks to evaluate the intrinsic value of an asset, considering various economic factors. A systematic trading plan relies on consistent methods and market trends, utilizing patterns and data-driven strategies to make informed trading decisions. Likewise, utilizing historical data analysis involves researching past market data to guide future trading actions, which is more methodical and deliberate compared to the arbitrary approach.

Thus, the defining characteristic of an arbitrary trading strategy lies in its reliance on irrational techniques, distinguishing it from more analytical and systematic trading methodologies.