Most traders are constantly searching for new trading techniques and methods to improve their performance. They try to determine which strategy works best for a certain instrument, time period, or market condition. This process needs commitment, practice, and mistakes made on the way.
Trading is a risky activity and even the most experienced traders face losses from time to time. However, if you keep on failing for quite a long period of time and the strategy doesn’t seem to be working out, it may be a sign to make some changes to your approach. Below are 5 signs that your strategy might need some revision and improvement.
You keep losing persistently
Even the most experienced traders encounter losses from time to time. However, a persistent trail of failures may be a clear sign to change your trading approach. Of course, commitment is essential for good trading performance, but constant losses may signal it’s time to try something new. It might be just a poor strategy if you have implemented it correctly, used it on suitable instruments, and practiced it for a long period of time, but your trades still keep on losing continuously.
It is important to be able to critically assess your performance, rather than continue with a strategy only out of the conviction that it is the right one. It might be the time to take a pause, reaccess, and get back to exploring and learning, study new strategies, trading styles, and instruments. Thankfully, Pocket Option provides you with an opportunity to try new things on its Demo account:
The demo version of the platform mimics the live trading one, allowing you to test new techniques, tools, and instruments without the risks of real trading.
It’s hard to analyze your performance
Revising your trading performance is one of the most critical factors of a good trading strategy. You should be able to look back at your positions and clearly understand what exactly lead to a loss, what worked best, and where you could have done better. When one follows a clear strategy with an outline of steps, it should be easy to spot which step exactly went wrong. Without this, it might be difficult to learn and improve your trading performance.
Pocket Option makes the process of analysis easier by providing a section with your trading history, organized by categories for convenience; you can find it under the “Profile” section:
The trading history section provides you with a lot of information. You can see where you stand in terms of the overall profits and losses, analyze which positions or instruments generated the highest returns, and what timeframes and tools you used to place them. This makes it easier to spot patterns that lead to successful performance or failures.
Your trades are easily affected by emotions
When your trading decisions are frequently affected by emotion, this may be a sign of poor risk management techniques, where you are placing positions out of greed, excitement, or anger, using too much leverage, or not analyzing market conditions well enough. A good trading strategy should specify a position sizing approach, the guidelines for opening and closing a position, and the kind of market opportunities you are looking for to avoid spontaneous and hasty decisions. This ensures your decision-making is based on a rational approach rather than momentary emotions.
You can’t follow your own strategy
It is not uncommon for beginner traders to slightly overestimate their own abilities and they are simply unable to implement their sophisticated trading strategy. Perhaps you are using too many indicators and it becomes difficult to spot the right entry point. Or the strategy could be very complex and require too much energy, so you end up following only a part of it. A strategy that is too simple may overlook various sources of market risks. It is a good idea to start with a strategy that matches your knowledge and skills, and the one that you are actually able to implement and follow.
Your trading strategy is incomplete
It is possible that your trading strategy doesn’t provide you with the correct guidelines to set up your trades, it is simply insufficient and lacks some key elements. The strategy you chose should be suitable for you personally, not too fast-paced, or not too slow.
Certainly, every trader has their own vision of what should go into a trading strategy, but there are some general components it might contain:
- A time horizon and trading style
- The selection of assets and markets that are going to be traded
- A method of identifying the right market conditions for a trade entry
- Appropriate risk management tools
- Goals of your trading and performance metrics
It is not uncommon that traders place their positions based on a single technical indicator and not consider other aspects of the trading process. Although technically there is nothing wrong with using a single indicator, these traders might overlook sources of potential losses, place incorrect amounts on each trade, focus on too many assets, and so on. It is important to establish your entry and exit conditions, time frames, risk management strategies, and technical indicators within your trading system before opening positions.
There are many things that could go wrong with your trading approach. Perhaps you are not using the correct tools to spot market opportunities, misinterpreting signals or your trading style isn’t suitable for the chosen instruments. You might be losing money because your strategy does not have the correct risk management tools implemented and you consistently risk too much on a single position. Sometimes you might think that your strategy is too strict and specific or maybe, on the contrary, too weak; then you might want to make the necessary adjustments to it.
If you are constantly losing, cannot monitor your performance, it is easy for emotions to take over, you are unable to follow your own trading approach and the strategy simply appears to be incomplete, it may be a sign to change it up. You can always look back at your trades to see what works best and practice new techniques sufficiently on a Demo account. Best of luck trading and enjoy using on Pocket Option!
Risk Warning: The trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never trade money that you cannot afford to lose.