what happens when a trading strategy suddenly turns bad from good?

Why does that happen? You have a trading strategy. It has worked very well. Then all of a sudden it goes wrong. you keep losing and it seems like everything is going against you now matter how patient you are. and you keep following your rules.

does that happen to you? and what did you do?

don't just give me "just walk away" routine.

Hi sed, i just stumbled across your post, the first thing that comes to my mind is when you say "It has worked very well", that is for how long, under what market conditions?

One of the most common mistakes is to not test a strategy long enough.

I don't want you to walk away, but there's a very nice thread about system developing and testing here:

http://www.forexfactory.com/showthread.php?t=4446

Hope it helps!

i came up with a real good strategy 7 weeks ago. been winning every week. clear and consistent. but for the past week pretty much every trade has been stopped out.

scenario:

last week i made money like the previous 7 weeks up until wed, then every trade went bad.

been that way to today.

so exactly one week of bad trades.


market conditions i trade US, asia, and sometimes london. I don't trade news.

that means ur strategy cant cope with market dynamics...

7 good : 1 bad, i think still ok with good money management

but, i think you need more than 7 weeks to test your system

how can you tell if it will change?

Some negative variance would easily account for a lousy week.

you cant tell if it will change, but if ur strategy revolves around market inefficiency , then it is bound to change when market corrects its inefficiency ...

u only have to figure out how u going to adjust the strategy when market condition changes...

Excellent question. It deserves the answer.
For me, I am in minority on this one. I would play on Demo account for long, long time (until you get it or just quit trading) and you would survive bad times and good times. You will gain huge experience and you will figure out what strategy really good and what strategy just looks good but in the long run not good at all.
People say demo not live account, well for me no difference for most part. I treat them the same way. If not for demo, I would probaly quit trading 3 years ago.
If you think that trading on demo waist of time then open micro account.

Now, I know exactly what working for me. It took me long, long time to figure out and it costed me a lot of money too (overall it took me more then 5 years to figure out things) I did just very minor changes in strategies that I use in the past two years.
So here is how it goes for me. I had excellent last year, for example, this year I started with big loses and only after 6 months I was break even and now I see that actually I am having OK year(definitely not great but I am positive and I will earn probably 5 times less then last year but that just how it goes). I believe in my trading skills and systems that I use because I use them for long time, I backtest them and I know for the fact that, far better traders then me use the same systems. 6 bad months did not turn me away, because I knew that my skills and strategies good enough to be positive in the long run.

My advice to you, experiment with strategies but prefer strategies of the people who are old traders, they don't say that they have spectacular results but they actually doing very well.
Young guys usually more talented and tell you that you can get 1000% profit in year but those guys will not survive long themselfs because they luck discipline and even talent not going to help them.
So just be very selective from who you will get trading strategy and backtest, trade on demo, trade on micro account. And only after that go with real size trades which is max 2 % of your bank roll. I actually see no reason to use more then 1.5 %
Good luck.

You need to continue the FX journey and i know how long the journey is i have been doing this now for a long time and the journey is painful.. Use your loses as your fuel to get you going again find another Plan that will work for a long time period then the last..

What you have to remember here is the FX is built on a time system now that system might last 1 day 1 week 1 year or 6 months it goes around in a cirlce but you don't know when it is going to change systems on you so you will plan that will take in to consideration the changes that happen at any one point of time.

That is why i like the Price action system you don't have to change much in that to get the changes that are going to happen

hope this helps you

Bruce Sprott

Good point. I don't know what your system is like, but systems may work differently under different market circumstances.

For example, if there was a clear trend during the last couple of weeks, your system may have given really profitable signals. Now, the prices may have stagnated, entering a range market, for which you system may not be suited.

I have the feeling you are trading very mechanistically. Experience will teach you how to identify different market states, and let you anticipate on this. In my opinion the ability of a trader to adjust to different market states is an important part of his "edge".

Also, don't be blown away by a losing streak, it could just be bad luck. Continue trading (maybe with smaller lot sizes or demo), keep a critical view on your system, and adjust/learn.

ok. it seems like it was the interest rate decisions that was screwing up my system. I am winning again.

So I guess my alterations of the plan is that whenever there is an interest rate, or employment numbers for that week then stay out. At least until after the decision.

So I should have stayed out this week

either find out why or dump it!!! then design a new one

Good conclusions