Hello everyone, I have been demo trading for a couple of months and recently getting some good results. I am not in a hurry to go ‘live’ as I know I still have a lot to learn and I am willing to learn the ropes to ultimately be successful in this respect.
I have noticed posts on various forums from people wanting to know if various systems / strategies are still working. This has made me wonder whether trading systems, no matter how effective, have an infinite shelf live. I undertstand that one should not apply a trend-specific system to a ranging environment and vice-versa. However, would one be over doing it by expecting a sucessful trading system, used in the right trading environment (trend / range), to be effective for say five years ?
In my trading experience, I’ve seen that one thing is certain: the market changes. Because it changes, because the characterstics of each currency pair’s price action changes, any system or strategy will eventually need to be tweaked at the very least. To what degree and how often? That depends on what the basis is for that strategy (and what changes occur in the market in terms of typical price behavior). Is the strategy based on price change momentum, or probable retracement moves, or statistical probabilities of daily price changes or ???
One should recognize that no matter the trading style or the trade triggers, adaptation must occur on a regular basis. In order to succeed in this business, you have to be able to see when conditions change such that your strategy must be modified in order to maintain a high probability of successful trades.
Hallo Ravel96, thanks indeed for responding and for your advice. My initial gut feeling was that at the very least system tweaks will be required. I am happy you confirmed this.
Thanks again for yours, and ehm, catch you again around this forum.
I don’t get it. What do you mean by “market changes”??
As remcurrence said, the market does change as sometimes it’s ranging, or in a trend, etc. But apart from these, [I]what[/I] changes in the market?
If a currency pair, say the EURUSD was in a strong trend back in 2002 (no idea if it really was, it’s just an example), then it has been ranging and again on trends until 2007 when it starts trending more strongly again, what’s the difference between the trend now and the trend back in 2002? What are these mysterious changes? Why would a trend following system that worked in 2002 not work in 2007?
I’d like to say that solid systems do not loose their effectiveness in the course of time. But you’ll learn a number of things along the time and it is just a good thing to add your accumulated knowledge to your systems. I have been studying and applying systems that were published 30 years ago and they have not lost anything from their weight. I’m not applying the original systems to the letter, but rather using them in a manner that suits my trading personality, and finding the best practices has taken its time. You might call such adustments to a system “tweaking” (and in my case a big credit goes to people in this forum), but this has had nothing to do with changes in the market, only with accumulated knowledge about what works and what doesn’t for me. And if you think that you can always learn something new in trading, then I would also like to say that your system cannot ever be completely ready.
That’s what i’m talking about. I find it hard to imagine how a trading system will lose its effectiveness, it’s not like the market “adapts” to it like the flu viruses do to vaccines.
If a trading system is to be changed, it’s because the trader has become more experienced and has learned new tricks so he can make the system more effective in spoting more opportunities.
Thanks, [B]kaalilaatikko[/B], for confirming my suspicions that the trading systems indeed don’t grow “obsolete”, as some people like [B]ravel96[/B] say they do.
These are very interesting perspectives on this particular topic that have been shared.
I personally find it quite fascinating that are that there are so many different opinions and perspectives on any given aspect of the business, and so many different viewpoints that are shaped by individual study and experience.
Hallo Everyone, special thanks to Ravel96, Decoir, Kaaliaaatikko, Daedalus and Equilibrium for taking the time out to share your constructive thoughts on the subject matter. Quite frankly, I have learned some from all your posts.
