The holy Grail of trading Strategies ?

Our goal at Crypto-Addicts is not only to send you signals and analyses. What we want above all is to make you real traders, with a strategy, an understanding of the implications, realistic objectives,... That is why, today, we will talk about the development of your personal strategy.

A major problem that many new traders have is the constant search for the Holy Grail of trading strategies, assuming that it exists.

Let's clarify this right now: There is no such thing as the Holy Grail of trading. The sooner you stop looking for him, the better for you.

You may then wonder how you can achieve profitability, while your current trading may be producing negative results. The key to understanding this is to start thinking in terms of optimization rather than strategy itself. Rather than looking for a winning strategy, you need to find out how to transform your current strategy into a winning one. This is often one of the main things that separates amateurs from professional traders.

Here is our recipe at Crypto-Addicts.

1- Record all your operations in a logbook where you meticulously record everything that is relevant to the operation. Without a trading journal, you are simply powerless when it comes to analyzing your trades, results and whether your strategy was the right one.

What do you need to register?

  • Entry price, stop loss and profit levels.

  • Strategy used and triggers for market entry.

  • Why did you take the value.

  • Your thoughts and emotional state when you entered the position.

  • The elements that concern you in this position.

  • The size of the position

  • Graphic screenshot

If you keep a trading log with all this information, you can easily go back and find out what has worked for you and what needs to be changed. Review and optimize your trades before moving on to a new strategy that you may have found online. Remember that a profitable trading strategy is not "found", but is built step by step.

Keep in mind that to obtain a statistically valid answer, it is generally recommended to have at least 50 actual transactions recorded in your logbook.

Thus, it becomes clear that there is no way to build or improve a trading strategy if you constantly change it. The reason is simply that you do not have enough transactions to determine whether or not the strategy is profitable in the long term, nor do you have enough data to know what needs to be changed to make it profitable. Because no, having a 100% success rate is just impossible!

2 - Do not change strategy as soon as you have a bad trade.

It is crucial for your long-term success that you are aware that markets are always changing. There will be periods when your strategy will be exceptionally successful, followed by periods of poor results. It is inevitable, and it happens to everyone.

The important thing, then, is what you do during periods when the results are far from ideal. If you have a systematic (or automatic) trading strategy, you have probably tested it and seen the yield curve over time. You will then know that weeks/months/years (depending on your trading period) of negative or balanced results can occur at regular intervals.

You must absolutely stick to your system during these periods of disappointing performance. Far too many traders change their strategy to realize that it would have become profitable again soon after.

However, the reality is that it is extremely difficult for humans to stick to a trading strategy when we experience prolonged losses. There is a concept in trading psychology called "emotional capital", and prolonged drops will simply exhaust your emotional capital, pushing you to change your strategy.

Emotional capital is as important as the trading capital on your account. If you are short of any of them, you will fail as a trader. You must therefore have confidence in your trading strategy and in the entire trading process. Know what to expect and get to know yourself well enough to know how much and for how long you can emotionally cope with a decline, and for how long.

Finally, it should not be forgotten that, as with everything else in life, perseverance is the key and success is not easy.

A question ? Don't forget that the entire CA team will remain present to help you. Have a great day

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