The Most Overlooked Trading Strategy: Sticking to the Strategy

Are you someone who has traded practically every forex strategy, system and EA in existence… yet still find yourself losing money hand over fist? If that sounds familiar then I can tell you one thing: You are definitely not alone. Most traders of all abilities have been there.

But what might shock you is that it may not the strategy letting you down – it may simply be you.

You see, some strategies work some of the time, other strategies work most of the time…but no strategy out there works the whole time. The ability to sit through any strategy’s drawdown period will make or break any newcomer to the market in their journey to becoming consistently profitable.

The irony is that it is highly lightly that the first strategy you probably traded in your trading career works just as well as the strategy you traded yesterday. Except you have probably moved on from both. Perhaps you grew impatient waiting for gains you once imagined or hoped this trading strategy would provide. Or, perhaps you simply did not want to face the pain of losing yet more money.

But what if you were to discover that all rule-based forex strategies out there work? You would probably feel a little cynical. However, if you only trade when your strategy tells you to, in a mechanical fashion then you really will be removing the noise and anomalies which typically occur in the market.

After all, you should only – and I mean only – trade when you do get a valid technical set-up which fulfills your rules for entry, right? Remember, no strategy actually wins and prints money all of the time. You can easily measure a strategy’s success rate by identifying how it’s performed over a period of time or number of trades (eg. A sample of 20 trades).

However, as we have discussed, what makes a trader successful in trading their chosen forex strategy is their ability to stick with it – even in the face of adversity.

However, for a many-a-market newcomer this represents little more than an inconvenient truth.  Many rookies simply chose to trade for the wrong reasons and their expectations are often unsustainably high. Often they will have an emotional attachment on the outcome of the trade (ie; the euphoria of making money from a winning trade Vs the pain of giving money away to the market from a losing trade). So, in their bid to find the silver bullet, they flit around from strategy to strategy like a dog chasing his tail.

Suffice to say, they do not understand variance: that the frequency of both winning and losing trades are random. The amateur trader may have unwittingly started trading a hugely profitable strategy at the start of its drawdown phase. After two or three losing trades they will move onto the “next best thing” – anything not to lose more money…only to discover that through doing that they have taken themselves out of the flow of opportunity and out of the running to benefit from a string winning trades.

Does this sound familiar?

Sure enough, their equity curve for that strategy may look negative compared to the highly profitable curve of someone else who has traded that strategy for month or years.

Summary

Through sticking to one trading strategy in “sickness and in wealth,” you will be keeping yourself in the opportunity flow and the subsequent frequency of wins and losses.

Remember, winning and losing trades from any strategy is very similar to waiting for a bus in the city; sometimes they all arrive at the same time or there is a long wait.

As professional traders, it is our job to stay in this flow, observing the key “make or break” skills of patience and discipline in order to make a success of it, long-term.

Simply choose a strategy which suits your personality and your availability to trade and give it a fair hearing over a decent period of time.