One strategy until it fails?

Yazanasad

Newbie
1 0
Hi

New to trading, still reading up on it.

Just if I could get a confirmation on this, that is, i only use one strategy at a time until it fails??

If so, what counts as a strategy?

Lets say I trade FTSE and I position trade and use double top double bottom strategy, does this mean I do not consider any other charting pattern like pennants, etc as long as that strategy remains successful?

Or is the strategy itself to trade using just charting patterns generally?

From the former option I could consolidate my strategy by using trading indicators. The latter opens me to different options however.

Whats the general consensus on this?

Regards
 
M

member275544

0 0
Hi

New to trading, still reading up on it.

Just if I could get a confirmation on this, that is, i only use one strategy at a time until it fails??

If so, what counts as a strategy?

Lets say I trade FTSE and I position trade and use double top double bottom strategy, does this mean I do not consider any other charting pattern like pennants, etc as long as that strategy remains successful?

Or is the strategy itself to trade using just charting patterns generally?

From the former option I could consolidate my strategy by using trading indicators. The latter opens me to different options however.

Whats the general consensus on this?

Regards

You shouldn't limit yourself to just one strategy at a time. That would be the same as putting all your eggs in one basket. Yes, you spread your risk across instruments, but you are still at the hands of the market state at the time.
For example: you have a trend following strategy, but the market is consolidating. You will find the vast majority of instruments also following the same as the index. Therefore you have to endure the constant to and fro, whipsaw, of being stopped out.
Now if you have two strategies, one for trend and one for consolidations and they were both firing signals, possibly even on the same instrument, you take a hit on some of your trend strategies, and start getting results on the range bound. Now what if you have reversion to mean strategies? do you see where I'm going. You can exponentially increase your potential return.

Overall you stand a much much higher chance of success with 3, 4 5 strategies that "work". I'll come on to that word... work

you asked what constitutes a strategy..
you need an entry criteria, exit, position size, possibly target, and a stop. You might want to add conditions such as higher time frame confirmation, the state of the market, the relative strength etc but those conditions are completely up to your own ccritera.

so taking your example of chart patterns, where a double top/bottom is looking for new trends to start, a pennant is looking at trend continuation. You could add consolidation phases so yes, you should be looking to trade multiple strategies

Ideally these strategies are being used have proven to be successful. They have a high hit rate, with a better than average win to loss ratios etc. You could test all these strategies together of course, but just make sure your logs record the strategy that fired etc. when you have multiple strategies on the same instrument, one going long, one going short potentially, with different stops then it gets confusing.

I'd probably say many don't even find one that works for them. I personally doubt you'd run out of strategies, but you'd run out of time or money if you only tried trading one at a time until it failed.

hope this helps.
 
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Reactions: Forexmospherian

neil

Legendary member
5,167 748
It's a long way to pippa-rare-ee..

You shouldn't limit yourself to just one strategy at a time. That would be the same as putting all your eggs in one basket. Yes, you spread your risk across instruments, but you are still at the hands of the market state at the time.
For example: you have a trend following strategy, but the market is consolidating. You will find the vast majority of instruments also following the same as the index. Therefore you have to endure the constant to and fro, whipsaw, of being stopped out.
Now if you have two strategies, one for trend and one for consolidations and they were both firing signals, possibly even on the same instrument, you take a hit on some of your trend strategies, and start getting results on the range bound. Now what if you have reversion to mean strategies? do you see where I'm going. You can exponentially increase your potential return.

Overall you stand a much much higher chance of success with 3, 4 5 strategies that "work". I'll come on to that word... work

you asked what constitutes a strategy..
you need an entry criteria, exit, position size, possibly target, and a stop. You might want to add conditions such as higher time frame confirmation, the state of the market, the relative strength etc but those conditions are completely up to your own ccritera.

so taking your example of chart patterns, where a double top/bottom is looking for new trends to start, a pennant is looking at trend continuation. You could add consolidation phases so yes, you should be looking to trade multiple strategies

Ideally these strategies are being used have proven to be successful. They have a high hit rate, with a better than average win to loss ratios etc. You could test all these strategies together of course, but just make sure your logs record the strategy that fired etc. when you have multiple strategies on the same instrument, one going long, one going short potentially, with different stops then it gets confusing.

I'd probably say many don't even find one that works for them. I personally doubt you'd run out of strategies, but you'd run out of time or money if you only tried trading one at a time until it failed.

hope this helps.

Yaz, take note of Mals words, He has patiently taken the time to set out an intelligent approach to trading. Now it's up to you to spend a lot of time studying and demo testing -may take a couple of years maybe but guaranteed it will be a long time before the penny drops and you make a little profit, It is a hard road despite what some may tell you.

Start here:
http://www.trade2win.com/boards/first-steps/89078-essentials-new-trading.html
 

barjon

Legendary member
10,705 1,809
I've always thought the main choice is that you can get to know the characteristics of a particular instrument(s) like the back of your hand and trade various strategies against it. Or you can get to know a particular strategy(s) like the back of your hand and trade various instruments using it.
 

ABTrading

Junior member
29 3
Hi

New to trading, still reading up on it.

Just if I could get a confirmation on this, that is, i only use one strategy at a time until it fails??

If so, what counts as a strategy?

Lets say I trade FTSE and I position trade and use double top double bottom strategy, does this mean I do not consider any other charting pattern like pennants, etc as long as that strategy remains successful?

Or is the strategy itself to trade using just charting patterns generally?

From the former option I could consolidate my strategy by using trading indicators. The latter opens me to different options however.

Whats the general consensus on this?

Regards

The first thing you will need to do is learn the context of the market you are trading in. There are basically 4 phases of the market and each phase is traded differently. A market tends to go through a consolidation/accumulation phase which is represented by a narrow sideways trading range, followed by a breakout leading to a markup phase -- the uptrend, then a distribution phase where your different tops are formed and usually there will be much wider bars, then a markdown phase. You need to understand (or attempt to) identify what phase you are in and trade it accordingly. You wont do well trying to hop on an uptrend when the market is consoldating or moving down. Learn to read your charts and identify what is happening then trade accordingly.
 
 
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