If one's trading method stops being successful, what can a trader do to recover the method or what can a trader do to develop a new trading method? My own method was successful for many months but has recently dried up. What can I do to keep from being killed while I develop a new method?
This can be one of the greatest fears of successful traders. "What if my trading becomes unprofitable?"
The first thing a trader needs to determine is whether his trading method is no longer successful, or whether his trading method has been gradually changed/shifted until it has become unsuccessful. Often times, a traders intuition, or gut feel, will lead him down the wrong path and ultimately cause the trader's performance to deteriorate.
Several helpful ideas already discussed on this thread are "The Equity Curve Technique" presented by Steve, and the frequent discussion on the value of keeping a traders journal. Both the journal and the equity curve can help keep a traders mind focused on what they are doing, and how well they are trading. Constant feedback can sometimes straighten out problems before they get too severe. Also, by re-reading your trading journal entries from previous successful weeks/months, you might rediscover some of your personal keys to success that had otherwise been lost.
In any case, if your trading method is unchanged, but has now become consistently unsuccessful then you must begin to develop a new method. First, drastically cut back on your trading volume. Watch, observe, learn. Go ahead and paper trade for a while. Only take 10% of the trades that you want to take, the best 10% that you are most confident in. Wait for the perfect trade before you pull the trigger. Big deal if you only make one trade per week. The goal is to stop losing, and begin to be profitable and regain some confidence.
Above all else, take it slow and trade less frequently. You may also want to take the time to re-read all of the posts in the thread summary: #Subject-28776. There is a lot of good knowledge in the thread summary from many successful traders on this thread. I hope it is a valuable resource for any struggling trader.
Good luck,
-Eric |
