trading strategy
Trading Strategy is the set plan an investor follows for when to buy or sell, so decisions come from a rule, not from panic or gist in the group chat.
In plain English
Somebody in every family group chat has once sent a screenshot at 11pm saying 'this stock is about to blow, sell your land and buy now'. And somebody always obliges, heart racing, thumb shaking on the trading app. That is not a strategy. That is gambling wearing a suit.
A trading strategy is simply the plan you decide on before the excitement starts, so that when the excitement does start, you already know what to do. It says things like which shares you will buy, how much you will spend, when you will sell for profit, and just as important, when you will cut your losses and walk away with your head high, not your pocket empty.
Take a Lagos investor called Chuka. His strategy might be boring on purpose. He only buys shares of companies that have paid dividends for at least five years running, he never puts more than ten percent of his portfolio in one company, and he sells if a share falls twenty percent below what he paid. No drama, no midnight screenshots, just rules he agreed with himself in daylight.
In London, a Nigerian civil servant might run a different strategy entirely, buying a broad market index fund every month regardless of what the news says, because her plan is patience over decades, not excitement over days. Both are strategies. Neither is right or wrong on its own. What matters is that each person decided in advance and stuck to it.
Even for someone sending money home to invest for a relative, having a simple written strategy protects that relative from a phone call that starts with 'oga said sell everything now'. A strategy is a promise you make to your future self, written while calm, to be obeyed later when calm is in short supply.
An investor sets a strategy: buy shares only when the price drops ten percent from a recent high, invest ₦50,000 at a time, and sell if the price falls a further fifteen percent. When a favourite bank stock dips as planned, she buys, following the rule instead of her nerves.
Questions people ask
Do I need a trading strategy if I only invest small amounts occasionally?
Yes, even small, occasional investing benefits from a simple rule, such as always buying on a fixed date each month. It removes guesswork and stops fear or excitement from making the decision for you.
Is a trading strategy the same as investment advice from a broker?
No. A broker or adviser might suggest ideas, but your strategy is the personal set of rules you choose to follow with your own money, including how much risk you accept and when you exit a position.
Can a trading strategy guarantee profit?
No strategy guarantees profit, because markets move on many things beyond anyone's control. What a good strategy does guarantee is consistency, so your gains and losses come from a plan rather than from mood.
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