Trading model definition
A trading model is a rule-based structure created to govern trading activities. Trading models help take some guesswork out of the markets while encouraging investors and traders to set risk parameters.
How to build a trading model
To build a trading model, you’d decide what style, method, and strategy to employ, how much money to risk on each trade and an acceptable level of market risk at any one time. You would also set profit and loss targets.
The trading rules would most likely include which conditions need to be met before you get in or get out of a market. You might use a combination of technical indicators for these entry and exit decisions.