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Why do trading strategies not work?

Why do trading strategies not work?


Imagine that you have studied a set of rules and an algorithm of actions that should lead you to a profitable trade. Every step you take is checked against a popular author's strategy with hundreds of enthusiastic reviews, and... drain your deposit irrevocably. Who do you blame yourself or the author of the strategy? Why do the same algorithms work for some people and do not help others? Let's deal with it. On thematic websites and forums there are dozens of classic and authoring forex strategies, which are presented as a "magic wand" for beginners and for those who are looking for ways to make good money on the Internet: from swing trading to scalping. Some certain strategies really make a profit. However, only in certain situations, which not all traders can take into account. Or take, for example, the basic trading strategy on three indicators. Two moving averages with different periods and an oscillator are used. It would seem, look at the MACD indicator, trade at the intersection of moving averages, confirmed by the oscillator signal. But if you put it on the chart, you will see false forex signals. Any strategy gives a large number of false signals. And only by working with it, adjusting it, feeling its reaction to price movements a trader learns to cut off the unnecessary and pay attention to trading in places where nothing seems to exist. Sometimes, the trader-colleague from the outside can point to those points of entry, which you can't see by yourself. Though both of them have technical analysis in their database.

The point is not that people who describe their "win-win" strategies, keep a secret some important part. The point is that the strategy is actually a set of measures. It is useless to act according to the template and exactly follow the instructions of trading books, if a person does not understand the market. A detailed guide line is not a panacea.
When following any trading strategy, it is also necessary to combine market analysis methods. The most common of them we described in our previous publication. For example, the popular RSI (Relative Strength Index) indicator with period 3 should be used on time frames no older than an hour, Moving Average indicators should have values less than 20 in the Simple drawing method. For a longer period, the Exponential drawing method should be used, and MACD (moving average convergence/divergence) should be rebuilt. In addition, the trader should understand why it is good to combine this strategy on three screens of Elder. Each method of market analysis is also not universal, so the trader always needs to adjust to the current situation and do not let things go on their own. Studying all the factors affecting the market, the trader later starts to act intuitively. But even in this case, the trader will face another problem managing his money. And for money management, there is also a set of rules that most market participants cannot follow. Thus, for making the right decisions and planning, a trader must know his percentage of profitable deals, which, unfortunately, is rare among market players. Errors can also lead to incorrect volumes, lack of understanding of the basics of working with leverage, lack of risk plan and trading plan. All of these factors are closely related to psychology and the ability to control yourself while trading.



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