How To Find a Trading Strategy That Works!?

in this video traders we’re going to look at how to find a trading strategy that works stay tuned

hey traders welcome to thank you for joining me alright so this is a question on one of the comments on my video and it’s from daytrader fidel he said awesome video i do have a video on how to find a strategy what’s the process in finding a strategy do i just write a bunch of strategies in journal for a month and see which one worked for me great question and this is something that a lot of new traders

i kind of struggle with and it makes sense because there’s so much out there like which do i use that would lose money it’s not the other one thing to to kind of consider and i appreciate your question by the way all the questions that are coming in um you know keep them coming if there’s something that we can answer straight away i’ll do it if i can help you guys i will you know that if i can’t then i’ll i’ll try to help you and point you in somewhere uh that can help you out so how to find a trading strategy and this is interesting because i recently polled um the people who are members of the mastermind group and there’s a small section of newer traders a lot more a little bit more experienced perhaps a year plus but the newer traders the most common thing is trying to find a strategy it’s like okay i can’t find a strategy the ones who have been in the game kind of five year plus chin to be looking to increase position size because they’ve got things dialed in it’s their challenge of trying to get more from the market and doing okay with so this is the right thing to think about

and the fact that you’re thinking okay how can i find a strategy rather than kind of going backwards and forwards for every single strategy is helping so i one thing i want to say guys is that nothing works all the time and when i say works you’ve got to be careful how you define success in a strategy so let’s look at two different extremes for example both profitable strategies

one is there’s a black swan hedge fund and these guys

will literally buy well out of the money put options in other words they’re going to get paid out something extreme happens and this is a failing strategy if you’ve looked at it over a year maybe a two-year period

loss loss loss loss loss all of a sudden bang them a huge windfall

make a thousand percent and it makes up for the five years but they’ve made nothing that’s a

really extreme strategy go to the other side of the coin again the option i’m using option as an example

selling options that are way out of the money so literally taking the other side of that strategy

okay so if you’re selling them the other side of that deal you’re making money making money making money making money making money making money and then every so often you’re going to get smacked just like the insurance business

take premiums take premiums take premiums take premiums all of a sudden there’s a fire you’ve got to pay out so there’s too extreme to trading strategies now you might look at them in a kind of small window and go wow that was really profitable

well that one’s awful but you’ve got to look over a bigger time frame and i get we are not in the business most of us aren’t in the business of sitting on a strategy for years and then hoping for a windfall that’s not where we are we’re sitting somewhere in the middle of that

and saying okay maybe i can put up with a a 60

win rate of 40 win rate as long as over the month or the quarter

it’s not too bad i end up with some profit in my pocket or even the year some people prepare to sit through a year or maybe it’s a week if you’re a day trader so you’ve got to be careful what lens you’re looking

at the strategy through and not automatically defaulting to a strategy with a high win rate because that’s a common problem i think with newer traders and guys you know it’s natural when we start trading we want to have a high win rate we feel like that’s a good success barometer but it’s actually not at the same time we don’t want a really low win rate because that dense confidence and even if you think you can stomach it you’ve got to kind of sit through it there’s lots of uh challenges with that so discard that so once somewhere in the middle okay so now we’re trying to look at a strategy that’s actually got a reasonable win rate let’s say 50 50 the worst we’re looking for and has got a good risk award ratio and all this kind of stuff now

something i talk about my price action program by the way you know there’s plenty of strategies out there we’ll look at they don’t have to kind of invest in a premium course to see strategies there’s some

you know plenty of good strategies out there but if you do

one of the things i talk about is balancing the risk of water ratio with the probability of success and there’s one of the i’ve got like a table in there and we’ll talk about some of the earlier modules of getting that clear in your mind and that’s something to look for so something that has a good risk award ratio personally i like to take trades with a good high

risk order ratio i’m risking one dollar to make three risking one dollars to make five

even then if i’ve got a 50 win rate i know that it’s good and i feel comfortable taking those time and time and time and time again so nothing works all the time let’s go back to this point nothing works all the time something that works under one condition is going to be the worst strategy ever so you’re never going to get this holy grail of a machine that kind of sits there and works

so the way to do it and the way that i like to do it is to go okay

what are their current conditions it’s super simple by the way what are the current conditions

the current conditions are a trending environment let’s use it this is a perfect example now

u.s tech u.s tech stocks are have a relentless bid behind them right now they do

right now that is the environment for u.s tech that’s also the environment if you’re trading in gold

not so much if you’re trading let’s say retail stocks retail stocks are range bound

so you look at the current environment then you go right

what would have worked if i traded a strategy in this current environment this is all we can do as traders guys and what would have worked in this relentless bidding tech is to be buying some kind of dip in any stock that’s got a i’ve got a good uptrend what would have worked in the range banner environment for the retail stocks would be fading highs and lows what would have worked trading currency pairs after the corona virus up until now we’ve started to get some dot uh dollar dollar movement would have been uh selling high and buying lows in a range bad environment so

we go right now we know the conditions we’re in now

bear in mind guys this may sound simple and i’m sure we have a barrage of comments that say well that’s oversimplifying it we could change any point yes we can but this is the difference guys this is the difference between thinking ahead and overthinking things and going you know what

we have an uptrend we are moving higher i am going to keep buying dips until the market does not move any higher until we kind of stagnate in a range for a couple of months or we do this or we break out of a range i’m going to keep selling that range until we break out it’s just sticking with it because often we’ll stay in the same conditions for a long period of time if you don’t like those conditions then wait for the conditions to change if we don’t like trading range about environment wait until we break out and then go okay

i’m going to trade momentum ignition type trade so

simply put look at current conditions or the markets you’d like to trade what is it what is it doing

is it is it a big kind of multi-year range are we at fresh eyes

and then just say okay what would have worked and then

you go back and you go right now i can find a strategy that works

in a trending environment let me just use a trending strategy

let me not try to be clever let me filter trades to align myself with the trend is another little trick guys which makes a massive difference if the market is in a severe uptrend just stop trying to short it just just say listen there’s plenty of opportunity to wait for the down moves

to get long right yes you know technically if you’re

selling extensions and mean reversion fine but that’s something that can come later and more advanced just align yourself with the trend and say hey i’m going to wait in this uptrend until the market comes down to my level and i’m going to buy it unless it’s over simplifying things but then we come to the point of okay how do i quantify my risk

how do i find trades that express the idea that we’re going to continue in the trend

or we’re going to continue to range back environment with the least amount of risk possible

this is where the intuition this is where the experience and sweet spot comes in so

i use a process of those of you on the program know of filters

and triggers and it works fantastically well i have a filtering process which brings the trades into my alert system if you like or into my ecosystem and then i have a trigger which gets me into the trade so guys there’s loads of free material and it’s not in me plugging my program you don’t need to go on a program if you want to invest in it you know where it is if you’ve been on the channel while you know where it is guys you don’t need to they’ve got stuff we talk about some of the candlestick entries on the channel

we’ll talk about you know other bits and pieces that you can use as triggers now very very simply you can say right okay i’m only going to go long i’m an uptrend eyeball i’m going to wait until we’ve hit the 20 period moving average on a daily there’s your filter then i’m going to enter when we have a break of the prior low and then a push back up our two day move or we have a tail on a candle or we have a tail on a candle and then a good bid or we have a bullish engulfing any of these kind of standardized things it’s like fitting them together like a jigsaw and now we’ve got a simple strategy we’re just kind of a simple strategy and if you’re in the right environment you can trade that and you can say right will i get bullish engulfing i’m going to buy the clothes i’m going to stop under the last low i’m going to look for a move to new highs most of the time that’s probably going to give me a three to one i’m going to take that

and take that until i see the market trade sideways for a week or something now you may be unlucky you may take that trade and something i’ve done when i’ve updated the programs i’ve said hey this is working really really well for me this is the sharing the exact strategy still working at this moment in time but one of the caveats is i don’t know when it’s gonna stop working we’ve got processes in place to pull back money and capital at risk when we do feel it’s not working but while it’s working we’re going to press it and we’re not going to do anything clever we’re not going to try to out think or overthink things

and so you know going back to the initial point of okay

let me put these pieces of jigsaw puzzles together once they’re together then just trade it just trade it and see how it goes and don’t try to fine-tune things if the market is going higher then just keep buying dips until that’s stopped but try to redefine i’ll try to refine

the entry so you can take the least amount of risk possible to get the reward that’s where the kind of sweet spot is for really maximizing your gains um and also understand guys that strategy is a guide not a black box

and so you know if you have a range band market talk about bull market we have a range bound market and you think that hey when we hit heisen that’s a strategy of saying okay

when we are up at a resistance level and we kind of broken through i’m going to fade it for a move back

it’s a it’s a theme to use for the conditions it’s not a black box entry of saying

i’m always going to take this because the more we try to make it into a black box

i think the harder it becomes so a guide a theme and by the way guys

you know what i talk about this this strategy there’s so many books as well that i’ve got strategies in

and it can go on to amazon and you know we’ve got opening range breakout strategy i’ve done a a video on that before there’s so many books that talk about you know different strategies if you want to use indicators how to use a a stochastic how to use an rsi all of these will work under the right conditions it’s just your job as a traders to go what are the conditions

is there any reason for me to think these conditions would change in the future no then why don’t i just stick to that trading strategy and run it until the conditions stop it sounds like i’m oversimplifying it guys but honestly throughout the my career when i’ve just done that that’s when i’ve you know had the biggest years when i’ve just gotten the nurses working i’m going to keep pressing while it’s working i’m not going to try and overthink things this strategy is working let’s keep going at it and and it will serve you in good stead moving forward so using strategies guys not blackbox final thing guys free and premium resources just talked about those loads of books out there that are relatively cheap loads of stuff on the internet with strategies as well ideas and ways and you can tweak and adjust for yourself premium resources the obvious is my program there’s others out there who do great material as well i think you should be a problem with buying um a premium stuff and investing and things like if you want to

you don’t need to like i said loads of free stuff as well that you can make and tweak

and adjust are to suit you and i appreciate the question

this is a longer video than uh than perhaps you anticipated

but this is the kind of thing that i know is so so key to new traders and i think the submarine guys is don’t try not to over complicate things just look at what the conditions are just think what what what would have worked and then just what we can do is assume that that conditions may well stay as they are in the future as you get more experience you can find the clues that mean that things are going to change and that just comes with experience but once you’ve got that trade it and see how you get on and back to the initial question very very quickly of having enough iterations of the strategy enough occurrences

yes don’t change strategies after two or three trades trade it for a while take notes take a journal go back review see what could be tweeted see what could be adjusted how can i improve my entry how can i improve my exit where can i do better where do i do bad at it what about the discipline aspect of it

um and do it like that rather than just taking one or two trades

not working discarding it looking for the next one because the next one look at the next one anyway appreciate your comments questions all that kind of stuff see you next time take care guys bye you

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