How long before you toss away your strategy ?

The Erect Trader

Member
72 70
In all the books i could read, some say 20 trades (Mark Douglas), others say 50 or 100 (Van K. Tharp). Actually, nobody knows. The one who knows that, knows the future. The one who knows the future would be the master of the universe. That's the question at 1 Billion dollars.
 
Last edited:

sharabela

Member
57 10
Hi!
I have being testing out a couple of strategies and i get that one should let their system run for a while so that the results are not just noise or chance but the merits of your strategy (like tossing a coin 10 time and getting 9 tails , which doss not mean that the coin is not 50/50) but how can you know that its a failing system, how long do you have to stick to it . to know objectively that it dose not preform as you wish (hope this makes sense ).
To test a strategy, at first you have to do some back testing to find out how it worked in the past. If the result is consistent, then you may trade on your demo. If it fails 5 out of 10 times but risk-reward is 1:2, it is a successful strategy. If it fails 6 out of 10 times, you may want to skip using that strategy.
 

The Erect Trader

Member
72 70
If it would be so easy, i would be happy. Actually, the past just show us that the best part of the strategy we are testing has past and it probably enter in a losing serie in the future.
 

kevinkdog

Junior member
34 20
After I've properly backtested the strategy (very easy to do incorrectly), I watch it for 6-12 months in real time to see if it performs well in relation to the backtest. Now, backtests are almost always optimistic, but the strategy in 6-12 months after development should make money (I compare backtest monthly profit to real time profit). And, of course, this assumes that the strategy you've created works the same in backtest as in real time (many strategies do not).

I will say this real time "incubation" has save me thousands over the years. It is really hard to do (who wants to wait for that long to trade?), but it will save you money.
 
  • Like
Reactions: The Erect Trader

hatemypips

Established member
702 62
If I see that after many trades like 100 or 200 I see that winning ratio is below 50% then I ditch this strategy and look for something else.
 

kevinkdog

Junior member
34 20
If I see that after many trades like 100 or 200 I see that winning ratio is below 50% then I ditch this strategy and look for something else.
Why is 50% important? Many successful trend followers survive with 30% wins. Isn't it really about expectancy (avg trade)?
 

RachelFX

Active member
100 27
I would say based on results over 20/25 trades - I base this on Mark Douglas advice from Trading in the zone.
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock