Did it ever happen to you? you had to change rules!

Hi everybody
I'm a pretty new profitable trader since i started to see some $$ a little more then 1 year ago.
But today i have a question:

Have you ever had to change your system rules during your career?

I'm obviously taking about a reliable system that you used every day for years, but after some time it was no more profitable, what did you do in that case?

I'm doing this question because i'm testing a new system, right now it's working great, made some back test and worked great, BUT in 2006 almost all the year long it would have been very difficult to follow it.

I also have a second system pretty reliable, tested for years it never gave me big difference from a year to another, the new one worries me a little!

what you think about dudes?

The last few paragraphs of this post address this question.

first: thanks for the answer, appreciate that

Second: yes and no... I don't completly agree with the post's autor I absolutely agree that trading profitable isn't a luck matter, what i don't agree is the faith he places in backtesting, because market changes and as happened to my backtesting everithing is fine for three years, but one month things start to change and your great system now is garbage, now what? do you start changing it? or do you just pass over and look for another brand new system? lately the system (mine) started to work again during december 2006 so after 8 monthes it started to gain $$ again!
I don't agree with the post author because it would be too easy to backtest a system and then say "fine, this one works, it worked for 10 years..." in that way EAs would already been invented and they could really beat the market, while the most EAs works for a certain period of time, but when market conditions change they will stop earning.
From my experience you can't think that backtest is the only answer, it is just a part of it!
I trade half way from systematically to subjective, before getting into a trade i look at things that can not be completely backtested.
As a matter of fact, i've made my backtest with Vhands trade EA (an EA that simulate the market tick by tick, just as real time trading) so paying closer attention i found out that all i had to do was to change the timeframe doing that system started to earn again, it could sound difficult to do something like that, but it's not, just take a look to a 5 min chart today (where trend can be easily spotted) and a 5 min chart in 2006... impossible to find a trend into that timeframe and so impossible to earn with a system like mine, starting from 1H to daily chart trend was still easy to spot again and the system restarted to earn $.



thanks hanover for your kind answer!
i'd like to hear someone else's opinion and start a discussion, that is why i placed this thread in "trading discussion" now it has been moved here, but i doubt any rookie will be able to answer (maybe i'm wrong)

so admin do you think it could be possible to place the thread into trading discussion again? anyway thanks!

one more thing!!

while backtesting with Vhands i found out that my system was way mooore profitable than during a usual backtest, don't think i have super powers and when i read charts i see the future! i don't even do something special, when i switch between timeframes and i place my support lines, i look at trend in different timeframes ecc.. i trade much better, and those things can't be backtested (in my opinion)

Short answer, yes. What makes you suspect this may be bad?

well, this would worry me a little! because who knows if i'll find the way to be profitable again?

Well, you don't know, but that is the traders job as far as I define it.

I see... i use a long term system and it works fine, probably (and hopefully) it will work good for some more...
probably you are right if i could predict that a system will work forever, it would mean predict the future! and predict future in trader's vocabulary doesn't exist!

What you need to have (as hanover pointed out in that other post) is solid way of determining when something is or is not working, if something stops working, it may start again in the future, but nobody really knows.

ok, but how do you trade? do you have fixed rules in stones?, if so you are right backtesting is all you need, but in that case you could even code an EA to do it for you, you would been anymore needed! (am i right?)
My rules are fixed but i don't trade every given signal so back test is partially usefull, but it doesn't have primary importance, i think that traders makes the difference, not just for the emotions, but also to scan the market and see where probabilities are in your favor

You're kind of on the right path, you just need some type of testing, be it forward or backward to see if conditions look good for a specific approach, then you just have to take a leap of faith (no guarantees anything will work tomorrow) and keep an eye on the results.

yes this is what i was thinking, backtesting is important but then your skill will needed... this doen't mean to have great skills, just basics then the system should drive you on the right way

The more indicators you use, the more changes you will need.....
Try to use small number of "universal indicators" like SR, MACD, Divergence...

If I may chip in, with own backtest, I try to see how price behave under my strategy. And, to tell you the truth, lately price doesn't behave as it was during backtest starting around July to August last year. Up to December, it's unusual behaviour (from my strategy point of view) brought me a lot more profit. But start January this year, especially after Obama officially into the White House and start making decisions after decisions, I had to pay extra attention to price movement. But I don't think I'll change my strategy in the near future. Just minor changes on the rules, but the basic strategy remains intact.

I don't use indicators, but i assume you're right, the more indicators you use the more variables come into the game and more changes will be needed

December has been an easy month for me too, very strong trend+ high volatility= many pips.

Those minor changes are what worries me, still never changed the rules, but when it will happen i think that psicologically would be an hurricane, because obviously the new changes (even if little) will bring win and losses too, and when you analize losses maybe your old system would have react better and that would probably hit my self confidence doing that, i would start to switch from the new rules to the old one then back to new ecc... trasforming a good relyable system in a garbage one!
That is why i decided to develop a second system different from the first one where my decision are as important as system rules, i feel more comfortable, because rules aren't completely fixed, this gives me room to breath (psicologically)...

http://www.forexfactory.com/images/misc/progress.gif

The forex markets can move fast, with gains turning into losses in a matter of minutes, making it critical to properly manage your capital. There is nothing worse than watching your trade be up 30 points one minute, only to see it completely reverse a short while later and take out your stop 40 points lower. You can protect your profits by using trailing stops and trading more than one lot. This is how you can rule your trading and win it.

A system that works under market conditions may not work under other market conditions. So, obviously, you'd been to use a different system. I realized a while ago that apart from being disciplined traders also need to be surprisingly adaptive, and they have to find the balance between the two.

This is my fear wishing to trade full time. It has been a long learning curve to trade successfully on a demo account and if the trading methods I use are no longer viable in a years time then what. It has taken me a long time to develop a system that works for me if it stopped working as markets change I think that would break my brain.

It depends on the situation, as a newcomer I was profitable in demo account with Bollinger Bands but in live trading I didn’t get the result as like demo. So I had to change the trading system. It’s really difficult to depend fixed trading system for all time.