Consistency of Trade

The risk of inconsistency
The "stop and start trading on the new" does not work. When you sell any method or system for a while and then stop and start selling other method or system, and then comes back and then start again with another method, you lose probably a certain characteristic of a system or method. Likewise, when you sell and then sell, or choose a certain method of signals. You are destroying the likelihood. The market does not change its rules each day or week. The market allows the probabilities over time.

A trader sent me the following message:
"I have violated their own rules. My attitude to the trade deteriorates. I want to go back to trading on a demo account for a little while to get back to the track and prove to himself that my methods work and return a little bit of confidence. What do you think about this ?

If your methods do not work, or you have doubts about them, you should not deal in these methods. This is contrary to common sense.

Before you start trading in some way, it is vital to check that it works. Also, it is important to decide for themselves in advance what the conditions would have to occur to stop the trade. You should try the double historic decline? You will need to be a loser for a period of time? Or should certain factors will change the market environment? Consider all this in advance.

Start and stop the trade is not working. Yet it is quite a typical thing that makes a trader. Traders often sell some way, losing a little or a lot, and stop, and then try to create or find something better. Then they will sell a new method, or advanced techniques, yet time is not lost, and they stop and repeat the process again. Again and again, many times. This distorts the probabilities. The previous method would often die only when they stop. The new method starts to lose only when they begin. Important sequence.

For this reason, I suggest those who like to continuously explore, even when they sell them to the changes introduced at the beginning of the month. In this way they will not be endlessly traded yesterday's transactions. For example, if the last time you allowed your profits grow and subsequently lost it, this time you seize their profits quickly only to watch as it grows without you. Consistency - that is the only way adjusted to the probability.

With regard to trade in educational accounts, there are two conditions for which, I believe, is desirable. Trades on a demo account where you will learn the technique. Trades on a demo account where you prove the method. Stop trading on a demo account in which both conditions are satisfied.

If you sell on a demo account for too long, you can get stuck in a comfortable condition, when there is no risk. Soon you'll have a problem with pressing the "trigger" when trading a live account. I often saw the traders, who could not make the entry too long after the trade on a demo account. Trading on a demo account can be a way of life, something like an interesting hobby. There is nothing wrong, in addition, it will not bring you any money, or teach your self.

If a trader, sent me a message, do not know work or not his methods for some time, he must stop and realize it. On the other hand, if he had just violated their own rules and thus do not actually selling their method, it must work on themselves, rather than on methods.

What if you could only decide outside the independence of what is required to develop self-control and become a consistently profitable trader? Remember that the more expensive cost of all closed or confusing opinion, which will cost you money your entire life. This will manifest itself, in that trade, not trade, this method of trading, trade order method, or to reject proven system or method. And this does not help the blind adherence to a system that does not work. Then we'll talk about the dangers of foolish consistency.

Severe foolish consistency
When the sequence of trade is the basis of the method, and when it becomes stupid? Trained to be consistent in applying the method, learning to trade, despite the recession, the decline has not ended, I once traded until the losses have not reached excessive proportions.

My sister said, "Stop! This is not working."
I said, "when I stopped, it starts to work. You have to be consistent."

At that time I talked to a man who had a large number of traders, trading on his money. He told me that every year he overestimates and refuses to approximately 10% of traders. He said that he kept year after year, those traders who stopped selling the system for some time, when it did not work, and resume again on her trade, when it started working. It made sense to me, but I wondered how to resist the order to not fall into the trap?

We all know people who are starting to trade on the best system, and then stop selling it when it ceases to make money. They buy another advantageous system and bidding for it, until it becomes unprofitable. Meanwhile, the former method is advantageous, so that they are returned to the first method, or purchase a third, and repeat the process of trade and change of methods. Invariably, these people are finishing up losing money.

I also know people who are selling a system consistently, even though they lose money. Some come out of the trade to be successful over time, and some lose their entire capital.

One thing of which I have warned traders who have research methods is to make changes to the system at the beginning of the month. This will allow them to continue research to find the best method, but prevents them from continuing to change their systems to adapt their latest deal. Make changes only at the beginning of the month will keep them from confusing systems.

The problem underlying the issue, constantly trading system during a recession, is to ascertain whether changes in the characteristics of the market that makes the system obsolete, or change in market behavior is temporary. There is always a temptation to think that the market has changed, and perhaps this is the case, and perhaps not.

Before you start trading on the system, you must make sure that it was not established on old data. You must observe the effectiveness of the system for trade in real time. You should consider the history of decline and understand what is typical and what to expect. As already mentioned, you should expect that you will double the historical decline in the real trade, and you must be willing to trade during the greater decline. If you decline more than the same period, it is possible that market characteristics have changed. Perhaps the system is outdated.

At a time when my system has experienced decline, my sister said, "It is clear that your approach does not work. Why do something that does not work?"

"Really, why?" - I ask myself. If this does not work, do not do this.

While watching some of my history, you would have to go back to 1970. To see a decline in the proportion that I have experienced. So, I was in a decline in the history of the system. On the other hand, I did not want to continue to lose money. This is not my style. On the other hand, I did not want to leave just before it starts working again. Downturns in good systems, usually accompanied by large periods of winnings.

Does the sequence of I silly? It looked this way. Here's what I decided to do, and I regret that I have not considered this possibility earlier. After a certain period of recession will be, I have ceased to trade and to monitor their systems. When the system returns to be profitable within a week, I am reviving trade. This will work? The study shows that will be. Of course, the future is always unknown.

Above we talked about the danger of inconsistency. True that we need consistency in the application and performance, to enable the probabilities of any method to work for us. But how long we continue to do what is not working? The answer is in the beginning. Decide in advance what conditions will make you stop or pause in the application of the method.

Forex Magazine
based on www.marketmavens.com