How to fix your trading when its not going well

 

 


Sometimes, even after meticulously planning and executing a trading strategy with precision, things still don't go as planned. Dealing with this can be frustrating and costly, but how you handle it can be crucial in determining the survival of your trading account.

Often, we become entrenched in a particular way of doing things without pausing to analyze whether it's effective or if there might be a better approach.

I've witnessed salespeople using the same pitch repeatedly, regardless of its success rate. Instead of adapting, they blame external factors like the economy, the product, or the prospect. Similarly, traders sometimes cling to a failing strategy rather than adjusting to evolving market conditions and developing a new approach.

Finding the balance between abandoning a tactic at the first sign of difficulty and persisting with a failing strategy for too long is essential. If you quit your trading strategy every time you lose on a trade and jump to another strategy, your equity curve may suffer. On the other hand, if you're too hesitant to leave a failing system for a better opportunity, you'll grind down your account.

The solution lies in testing your theories.

Is this belief I have about price action really true? Test it to find out.

To test your theories about the market, you need accurate trading records. Every successful trader keeps detailed records of their trades. Without recording your trades, you have nothing to test.

We all develop theories over time about the best ways to solve problems or handle situations. We have beliefs about what makes sense and what works best. Whether it's forex vs futures or reversals vs. breakouts, our approaches are based on our theories and beliefs. However, sometimes our theories are flawed or outdated. To excel, it's crucial to regularly test your theories. Re-evaluate your existing method by testing it thoroughly. Evaluate your past results, conduct research, and compare your methods to alternative approaches. You can utilize surveys or trial new methods to determine if your current approach is optimal. If it is, fantastic—keep going. But if there's room for improvement or a better method available, it's time for a change.

The key is to build a robust testing and evaluation process into your trading. Build a practice of  analyzing your trading statistics on a weekly basis. What is working? Which types of trades are most successful?  Maybe certain types of trades are not working at all and can be removed from your playbook.

The solution to fixing a weak trading streak is to test your theories and then replace those theories which are not adding value to your trading success.


Justin 

P.S. If you want any help testing theories, please feel free to reach out to me. I’d love to help.


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