Have you ever had a trade idea and didn’t bother to test it? Or maybe you started testing it, but it was going so badly that you changed it or scrapped the idea? Did you ever follow through with testing what appeared to be an awful strategy? What if you took that trading strategy with terrible performance and did the exact opposite? Flipping the chart from descending to ascending returns. That could be amazing!
This is exactly what happened when Stephen was testing one of the short-term trading strategies that we are working on in our effort to achieve our Impossible Trading Goal. We had an idea. It sounded great, and it seemed to work great in initial tests. It also worked well for a series of live trades. But as we found out trade ideas that look really great in the short term can turn very bad when tested over time. In this case, the longer we tested it, the worse it got. This is the point where most people get frustrated because they are seeking the perfect strategy that doesn’t exist. As a result, they might change the strategy or give up, and this is where they go wrong. Realize that there are many benefits to running a complete test on a strategy without modifications. In this case, the trade was what most people would consider a flop. The long term back tested returns clearly produced a solidly negative profit and loss curve. But that is not necessarily a bad thing. In fact, we all learned some extremely valuable lessons about trading strategy and development from this process.
Experience and learn from this very exciting moment when we realize this failure can be turned into a success when our professional coaches are expertly collaborating on achieving the Impossible Trading Goal. We wanted to share this segment from a Trading With The Pros session to help you become a better trader.