Some many strategies are developed but all traders have one in common, the element that separates them from the pack (most starters lose). These traders have tested their strategies to the bone which gives them a really good chance to have profits at the end of the year. So, yes, they are slow turtles, actually, they are not racing at all. That element is called persistence, it is present in so many ways and many aspects of trading. Each of the trader’s eras requires persistence which ultimately improves your overall trading skills. Now, here is how to improve results with just this one element, even though we could argue there are many, we believe this one is the one that cannot go away if you want to see the results every year.
Strategies that Work
It would take many pages to describe how you can improve a strategy classified as a reversal, swing trading, scalping, channel breakouts, deviation probability, and so on. You can even mix strategies based on the market conditions or mix the theories to create a “diversified” decision. At the end of the day, backtesting results will judge if that strategy combo is working or not. Strategies that work are the ones that are tested out and give good results over and over in the long term. It is great we have demo accounts so we can test as much as we like, yet we need to be persistent in this endeavor to find the right combo. And this is how most traders start, testing their first strategies. The first and the best way to improve your strategy is by analyzing the test results from the excel table, myfxbook, or any other journaling tool.
The stats are a good giveaway of what is good and bad with your strategy. The P/L line is not always the most important, pay attention to other markers such as the drawdown, profit factor, Sharpe Ratio, and other, trade-specific stats, such as Risk to Reward ratio, how much money you risk per trade, and so on. The amount of attention and work you invest in this stage will equal how much your strategy is improved. However, do not spend a year on one project just to conclude it does not work, take a hit and abandon ship. Persist. There is so much to explore out there.
The Iron Mind Strategy
All that work you have done is paying off, your strategy works consistently in your backtests. Forward tests confirm you can make good money, all you have to do is go live. And disaster strikes. Feeling broken or mad? Does not matter, to make it in this game you need to persist. At this point, if your strategy works mathematically, there is one factor that could ruin your nicely developed system. Your psychology probably failed. The system never had a chance to do its thing because you kept interfering.
We would advise you to start with indicators since they are strict, unlike our minds. Especially on very important trading parts such as risk management. We can get emotional, we might be tired, drunk, or something else, If we let our physical and psychological state interfere with our trading we cannot get persistent results. And there is that word again.
Indicators are an easy solution for this, but it might not be enough, we have to accept the strategy could be better if we interfere less and let the tools work. The extent of how many indicators and tools you have in your strategy depends on you. It still might not matter because beginner traders think they can do better. Some traders drop the indicators once they become experienced reading the charts, some keep them forever and look out for better ones.
Keeping the Mind Open
Traders can put the badges on once they overcome psychological issues. The strategies they have are finally doing what they do in the backtests year after year. With these, they can become pros, using their own money or having investors. However, traders will need to improve on what they already have. They need to be persistent still because at some point the market will change, the same way forex is different today than 10 years ago. Of course, your strategy could work great, even though it was based on the old market conditions, but this is not always the case. Very successful traders could “lose their mojo”, and this happens even to veterans in the industry.
If your strategy is indicator-based, lookout for new versions or adaptation of the same. If you use some moving average, try out a step version of the same. Did you know inverse Bollinger bands indicator can also be a great type of moving average? Improving the strategy requires keeping an open mind about ideas, similar or completely different. Each strategy has something unique, when browsing strategies pay attention to the trading plan, there might be a rule that could benefit your strategy if applied.
Find Good Resources
Exploring the world of forex is very interesting, you never know if some forum from the depth of the search list might be what you are looking for. Interestingly it is mostly the community portals where people share their ideas and creations that are the best sources. If you thought a good source is some popular tv station, you are wrong. Even the websites on the first search result page are more of the same. It is like they are cloned. Know you need to dig deeper unless you like conventional ideas that do not get you anywhere. Presenters on tv are bad traders, they just sound smart with the lines and tools understandable to the masses. We all know better, even beginners who went through babypips’ school know the analysis is much deeper, from a technical standpoint.
Their fundamental analysis also is not what you need. Rarely ever some information from the TV is useful for trading. If you want to really have insights into what is going on with the markets, pay attention to dedicated research channels. They are present on social media like YouTube and Twitter. For example, The Rich Dad Channel is hosted by well-known investor and bestseller author Robert Kiyosaki. The channel is full of fundamental insights about the markets and politics inevitably connected to the USD, EUR, and other currencies. What is great about the channel is that Robert hosts pros who are specialized in certain markets, who in turn have their own channels. You get the idea this is great for exploring other channels of your interest knowing you won’t stumble on shallow analysis TV stations.
Connect with Other Traders
Introverts rarely do this however, when you are really stuck and do not get the results you want, consult with other traders. Forums are a good way to go with this but do not expect someone to hold your hand. More often than not someone has already asked the same question. Still, if you have some new problem worth sharing, you will be amazed at how many smart trades are there who could help. Sometimes it is just words that you might need, not pointers or indicators. If you ever become interested to become a pro trader, try to apply with a prop firm that organizes trader community events. This is a rare value that is very helpful for your strategies and your mindset.