You may have spent the last few days, weeks or months developing your very own trading strategy which is great, having your own strategy that is suited and adapted to your own personality and trading habits is great, however, this does not actually mean that it is the right strategy for you to be using, this can be for a number of reasons that we will look at later in this article.
You may well be seeing others boasting about their profits or the amount of pips that they are making each month which could then make you want to switch over to that one and to abandon all the work that you have put into your current strategy. This is of course not the best idea or thing to do, firstly we do not know if those results are actually real and secondly, those strategies are created for those people not for you. So simply wanting to emulate someone else’s success is not a good reason to throw your own strategy to the side, instead you should be sticking to your own.
Before we look at the reasons why you possibly should change your strategy, create your own and what you put into it, because if you missed out one or more of these things then you may just need to alter your own rather than look for an entirely new one. Did you take your time to play it? Including risk management, your risk to reward ratio, and just overall risk of the strategy. Are you using the correct indicators for the strategy, there is no point having 100 indicators if you only use 3 or 4, but make sure that those 3 or 4 indicators are the right ones which give you the right information. How long have you tested the strategy? If it has only been a week or two, then you need to use it for longer, a few months at least to ensure that you are clear as to whether it is working or not. Finally, are you following the rules, and do they suit the current market conditions? Not all strategies work all the time, yours may work when there are different conditions to the ones in the markets right now, so you may not need to abandon it completely.
Since you have done all of that, if things still aren’t working then it may be time to try something new, so we have come up with some reasons why it may be the right time to jump out of your current strategy into a nice new shiny one, this does not mean that the new one will work, it may give the same results, but it is worth trying something that more suits you as a trader.
You struggle to follow your own rules.
When you created your strategy, you would have created some rules that you are meant to be following. The problem is that some people struggle to do this for a number of reasons. Maybe there are just too many of them, maybe they are a little unrealistic, whatever the reason as to why you are not following them, it could be an indication of this strategy not being suitable for you. You breed to be able to be consistent with the rules, this is the only way to work out whether a strategy is successful or not, so if you are struggling to stick to them, no matter what they are, this strategy is probably not the right one for you. Of course, as mentioned before, it is always better to slightly tweak these rules to see if that makes things easier rather than just ditching the entire strategy, although that is of course still an option that is available to you.
Does your strategy require too much effort?
Let’s be honest, you probably don’t have 12 hours a day that you can set aside for trading, if you are working a job at the same time then you probably only have a couple of hours each day to trade. So if your strategy currently takes you hours to find a trade or it requires you to be online at ridiculous hours then do you feel that you will be able to keep it up? If your system is keeping you up or is requiring you to be online at hours and times that are not suitable for you then it may not be the right strategy. You may need to find one that fits in better with your current schedule rather than allowing one to dictate it for you.
Are you spending more than you make?
This is more for those that are buying their strategies or using Expert Advisors. We should point out that some are fantastic and can make you money, while a lot of others will not. However, if you are paying for a signal or an EA, then you need to be able to add the costs of this into your profit and loss numbers. If this results in you spending more on the signal or the Ea than you are making,g then we are sure that you can see the issue here. A good signal or EA will be able to cover its own monthly cost with its results, if it cannot, then there’s clearly something wrong and you should probably consider moving on to a different one.
The market conditions aren’t right.
There may not actually be an issue with your strategy at all, it may just not be the right time to be using that exact strategy. There is no one strategy that works all of the time, they are all suited to certain market conditions. Some like trends while others like a more up and down market If Your strategy works on a trend but the markets are going sideways then of course it will not be effective. This does not however mean that it won’t be effective once the markets begin to trend. So you should still be keeping that strategy at hand once the market conditions change. So try and have multiple strategies that you can switch between based on the current markets and what works best for them.
It’s not profitable.
The big bad obvious one, if your strategy is not profitable, then you should not be using it. We are not talking about not being profitable week to week, we are talking about being profitable over a long period of time. If you have been using it for months and it is still not profitable then it may be time to look for another one to try.
So those are some of the reasons why it may be the right time to try and get a new strategy. It is entirely up to you what you do, or how long you give a strategy before deciding to get a new one, but try and give it enough time to have enough results to see an accurate portrayal of how it will perform. You should also not be shy about simply tweaking things with your current strategy rather than looking for a new one completely.
It can take you time, effort, and possibly a little bit of luck before you find a strategy that works for you, just don’t be afraid to ditch some of the work that you have put in in order to find a more suitable strategy for you. Take your time with it, demo it to ensure that it works and this will hopefully allow you to be more successful over a longer period of time.