
Introduction Understanding the difference between trading and investing is essential for assessing financial performance accurately. While both activities aim to generate profits in financial markets, they operate under different assumptions, time frames, risk exposures, and decision-making frameworks. Measuring results without recognizing these distinctions can lead to incorrect conclusions about skill, strategy effectiveness, and risk management.

Introduction to Rules-Based Trading and Investing In the world of financial markets, participants face a continuous stream of information, price movements, and external events that influence asset values. A rules-based decision process in trading and investing refers to a structured methodology that relies on predefined criteria to determine when to enter, manage, and exit positions.