For the already profitable traders this post is for you.
I’ve been trading for years now and I’ve gotten to a crossroad. Still not consistent. But the problem is that, I don’t even know what the problem is.
My closest feat to consistent profitability happened last year when I bought a prop firm account. Before purchase I did lots of backtest.
*Passed first and second phase within 3 weeks.
*Traded live and made a profit of 10%.
*My withdrawal was to be due in two weeks.
I was elated, suddenly I began to decline. FYI my risk management was good. My risk was 1% per trade and max. of 2 trades a day. And I didn’t even trade every day. There were day when no opportunity surfaced and I stayed away.
But I lost it all without actually making withdrawal in the end. The strategy I was using gradually stopped working.
Now I’m so confused I don’t even know why I stopped making consistent profit.
The probability is your strategy hasn’t been tested for all cases. A strategy is considered good if it can surpass at least 8 years. That is because you have to try the strategy on every condition in the market.
Most of us only test our strategy for 1-2 years. We have to know there is economic’s cycle. It usually runs for 4-6 years per cycle.
For example you have a strategy you tested for 1-2 years. During 1-2 years the market is trending up. When market is moving sideways, your strategy will be less effective or even fail. This is normal, many strategy can only survive on certain market condition.
Usually a phase in a market will last for 1-2 years. For example in 2020, GBPUSD was trending up. 2021 it was sideways. 2022 it was downtrend. 2023 it was sideways until now.
So, you have to test your strategy for at least 8 years to make it mature.
A mature strategy need to be able to identify the state of current market. After knowing the status, we should select what strategy to play with.
There are many strategy can work for all conditions, but it will not be effective. If you don’t have good money management, you will loss your fund pretty quickly.
For example, I’m using many entry strategy. Before I pick a strategy, I will analyze market condition, then I will select the best strategy to enter the market.
It’s possible that your strategy’s performance declined on the market(s) you were trading, while improving on markets you were not tracking.
It seems that all strategies cycle up and down like this - even good strategies are not 100 percent effective on 100 percent of markets 100 percent of the time.
A further implication for new traders is to distrust chart-based strategies which “only work on GBP/CHF”.
What I mean is a consistently profitable strategy which you happen to find works well this quarter on say USD/JPY may or may not work well on that pair in the nextquarter. But it might at the same time be working fantastically well on say GBP/CAD. All strategies seem to do this, and there will be nothing in the charts or the fundamentals to signify which pair is going to be best and which pair is going to be worst - nor why - but they will one day swap places anyway…
Aim to try out trend trading of FX currency pairs. This strategy will last forever FX is available. I choose the candles on the Weekly chart and being backed up by the same 4hr price action movement on a daily trade.
So, for example each day choose a pair that has two/three weekly candles moving in the same price direction and then see if the 4hr is following the same path. If so, you have a daily trade that has a positive probability of a winning trade.
It’s closely akin to the kind of methods advocated by Marcel Link in his famous book “High Probability Trading,” isn’t it?
It sounds totally logical and as though it “must” put the odds in your favor, by “getting the direction right”?
Do you have actual evidence that it works, Steve? Or do you do it mostly it feels so totally logical? I’m asking because although it feels entirely logical to me, also, and it’s what I instinctively want to do, I don’t think I’ve ever actually seen any real, objective evidence that it confers any edge?
It is my strategy and it is profitable. I also use Myfxbook - fx Market section to determine that it is also in price agreement, and Ichimoku with:
MACD 3. 10. 16. set up
SAR 0.09.0.50.