Do you think a certain strategy always works?

I told some of my acquaintances that if you have a good trading strategy, you can reap much gain from the market. They replied that a certain strategy doesn’t always work. How true their words are?

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In terms of highly specific detailed trading strategies they are right. But that’s maybe because these give so much weight to detailed tactics, which turn out to be randomly successful at best. See The Transparent Trader on Youtube for statistical testing and evidence.

But the most general principles never fail. When the whole globe’s big banks and funds are buying USD and selling JPY, it’s not wrong to be long USD and short JPY.


I would agree with your friends. Generally a strategy will only work in certain market conditions. Traders normally stay profitable by having several different strategies that they use depending on what the market is doing.


I guess the answer is “it depends”… :grinning_face_with_smiling_eyes:

IMO, it depends on what kind of strategy one is talking about. Here are two examples:

  1. Strategies based on indicators whose values are based on mathematical formulas, such as MA’s, Stochastics, RSI, etc. These are effective only when the market is moving in synch with the mathematics. If markets always moved in smooth sine wave patterns with the same durations then these would always work. But that is not the case. Such strategies that work well in trending mkts will do badly in ranging mkts, etc.
    And markets change over time. For example, the USS stock indices are much more active than they were a few years back with bigger ranges and more volatility in both directions.

  2. Strategies based on Price Action are more resilient to changes in mkt characteristics because they are more flexible and reactive to changes in the price action as it is currently. For example, defining S/R levels and trendlines, etc is the same process whatever the market is doing. Candle patterns, gaps, zones, etc are what they are, and are not time sensitive to changes in market behaviour.

The core difference, I think, is how mechanical one’s strategy is. If, for example, you methodically trade an MA crossover system then its effectiveness will fluctuate over time. But it you subjectively assess S/R levels, or candle formations, etc then the evaluation process is generally the same irrespective of the changes in the market character. But that is due to the subjectivity.

I am not saying one is any better than the other. This is just my take on it :grinning:


Yes, it’s exactly true that a certain strategy doesn’t work always so it’s always better to follow multiple strategies.

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Very interesting responses already! :blush: Hmm. Personally, I’d also have to agree with this. There’s just a lot of things to consider. :open_mouth: Like market conditions, trader’s personality, etc. :open_mouth:

Your friends already have acquired experience of the dynamic nature of the markets. That is why I concur with them.

But don’t forget that 95% of traders lose their money. So your friends might be “right” but are they the right people to be asking! (you could also ponder is Babypips the right place to even seek an answer to your question since most people here are beginners or still finding their way).

The answer is it depends what kind of strategy you are talking about. There are a number of successful full-time traders and they are not constantly changing their strategy because their strategy encompasses the changes that occur in markets, It is not really that complicated. You just stop relying mechanically on RSI, MACD, Stochastics, PSAR and all those other junk mathematical, curve-fitting, formulas.

Ask the sheep a question and you will get a stereotyped answer because they all go through the same learning process…which is why 95% continuously lose their money. And if your follow the crowd opinion?

Think about it!

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The only long term profitable strategy is by trend trading, but retail traders find it too simple to follow. For instance the big boys are trending long term using the 200 SMA as a guide.

If you google a US financial client investment firm, they have been trading profitable trends for four decades, and using only High Water Marks as a cost to protect their clients.


If you do have it, please help me then. I really need the strategy that works all the time. That’s insane. Hahaha.

How much you sell the strategy?

Having a profitable strategy is only part of the battle. The correct application is very difficult because it requires patience.

To find such a strategy, backtest it throughout different years.

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this is a super-important point, which so many people (in forums, anyway) seem not quite to appreciate

it’s essential to “backtest for robustness”, i.e. to see whether a system is safe to use over different kinds of market conditions

it doesn’t have to be profitable all the time, but if it’s profitable some of the time and makes huge, horrendous losses all the rest of the time, which your backtesting didn’t discern, then obviously it’s not so good

it isn’t just about how long you backtest over - there are loads of threads here (and elsewhere) asking “how long a period do you have to backtest for” and all these questions are missing the point

if you’re looking at a trend-following strategy and you backtest it on trending markets, it doesn’t matter whether you backtest for 3 days, 3 weeks, 3 months or 3 years (if you can find a trend that long) - the results will apparently be good, and then when you try to use the same strategy on a ranging market, you’ll lose money

this often happens!

and when it does, that’s what often makes people say (completely wrongly) “backtesting doesn’t work and has no value” just because they didn’t know how to do it correctly

nothing works all the time

you need to have a way of using things only when they’re likely to work

sometimes that’s not terribly difficult; sometimes it’s very difficult indeed - it depends how “robust” it is and on market behaviors, too


This is key. This is where patience comes in. No strategy works all the time? When we say this, I wonder what this means.

If I’ve got a strategy that works for a month, and then stops working…Is it the problem me or the strategy?

A lot of us here have profitable strategies. The KEY is knowing WHEN to use the strategy. This means WAITING for the correct signal and exit.

As for me, I’m struggling with this. I’ve tested my strategy throughout different years, and it’s profitable. But taking wrong signals will only deplete my account. So, does it work all the time? On all pairs? Well, not if the signals aren’t there.

If the signals aren’t present with a particular pair, then I won’t trade that pair. Simple.

Right. Then, all you gotta do is sit on your hands, and be patient. This often is quite difficult. Not trading IS a position.

@flamingoproxy What do you think?


i agree completely …

i agree especially with this! :sunglasses:

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The mystery at the heart of strategy failure is illustrated - but not explained - by the work shown on Youtube by The Transparent Trader.

Yes, we all have to recognise that trend-following strategies cannot work well when there is no trend and range-trading fails when there is no range. But his findings are very clear, that strategies cycle in and out of effectiveness even while price is moving in what would seem to be optimum behaviours. It’s also not down to just selecting the right pairs either - he commonly finds a pair which has been responding well under a given strategy for perhaps 3 or 4 years, but then fails for the next 4 or 5.

And yet the charts show no clues why this happens. It’s the most frightening thing I’ve learned in trading.


My all trading strategies are made with moving average and fibonacchi combination.