How long before you toss away your strategy ?

Very tough question as you have to make sure that you have followed it fully and there is no human error but if you have 100 trades and are not profitable its a concern
 
attila low said:
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 ).
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If after 100-150 trades I see that it can't make money I start to look for something else. Also I check transaction costs to see if I get slippage of wide spreads too often as a criteria that the strategy is not usable.
 
FullSizeRender-24-08-21-09-07.jpg
 
Karebenj said:
It seems to me that everyone has their own terms to answer exactly at which particular time it is quite difficult.
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Imagine knowing when we must change/adapt the strategy? Haha! The one who would have the answer to this question, would simply be billionaire.
 
i always use my demo account to test out new strategies. i always try each one for about 2 months.
 
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:
attila low said:
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 ).
Click to expand...
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.
 
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.
 
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.
 
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.
 
hatemypips said:
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.
Click to expand...
Why is 50% important? Many successful trend followers survive with 30% wins. Isn't it really about expectancy (avg trade)?
 
I would say based on results over 20/25 trades - I base this on Mark Douglas advice from Trading in the zone.
 
I would collect a decent sample size of trades to make a decision off of as you want to be able to ascetain if poor performance falls outside the realms of just a bad run of variance.
 
Get the overall P/L of your last 30 trades should bear out wheter or not your strategy is worth keeping bud
 
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