Successful strategies are making traders lose every day.
The fact that it’s successful makes it worse — you can’t blame the strategy because it worked for others.
Today I’m here to tell you 4 reasons why this could be happening.
Let’s dive in:
1. There’s No Real Proof It Works
If you’re using a “winning” strategy that’s not working, chances are you got it from someone else. And let me guess, you weren’t shown proof of it working?
How did I know? Well, most traders claiming to use winning strategies don’t show their results. It’s mostly hearsay or questionable images. Unless you see evidence such as live trading or backtest information, assume it doesn’t work.
That said, backtest third-party strategies to confirm it works.
Men lie, women lie, data doesn’t.
2. You’re Missing Key Info
This could be the:
- Best times and days to use the strategy.
- Maximum risk to use to avoid blowing your account.
- Optimal risk-reward settings.
- Pairs the strategy works on.
The reasons are endless.
For external strategies, there’s one more reason to point out:
The trader. They can either take a systematic or discretionary approach to their strategy (or both). Again, this is why backtesting is important. It lets you know essential details and helps you define internal parameters to make discretionary decisions.
3. It’s Not As Good As You Think
A strategy that yields a 1% return over 1000 trades is still considered successful.
It’s good for a hedge fund or someone trading with millions. But for those with small accounts…1% over 1000 trades is not worth it.
A strategy being successful is not enough — it has to align with your trading goals too.
4. Outdated
This is the one that catches most people off guard.
Unbeknown to most, the markets are always updating. It’s possible for strategies that worked yesterday to no longer work today.
So if you’ve been using a winning strategy for years or a strategy people claim is working, backtest it within the last 6 months. Unappealing backtest results could mean your strategy is losing its edge.
To Conclude:
Backtest, backtest, backtest.
It’s the only way to validate whether a strategy truly works and aligns with your trading goals.
More importantly, backtesting gives you the insight to tailor strategies to your specific needs, whether it’s adjusting for your risk tolerance, trading style, or market conditions.
Without it, you’re blindly trusting a system that might be irrelevant to your circumstances or even worse, outdated.
Remember, trading is about adaptation. The markets evolve, and so should your approach.
A strategy is not a golden ticket—it’s merely a tool. And like any tool, it must be honed, tested, and modified…Continuously.
Anyway, that’s all for now.
It’s time for you to soak in this information and smash markets.
Happy trading!