Your trading strategy was working like a Swiss watch, and consistently brought you income in almost all conditions and trading a wide range of assets, but recently something went wrong. To maximize trading strategy performance, it’s essential to adjust and fine-tune your approach as market conditions change.

You started to get nothing but losses from trading with this strategy. The good news is that any situation is quite remediable, and you will always be able to understand in time when your trading strategy stopped working and how to fix it.

It is important to understand that your trading strategy becomes especially important if you choose cryptocurrency trading. After all, cryptocurrencies are known to be very volatile assets, cryptocurrency prices can rise and fall very rapidly, which is why you need to make quick and preferably correct decisions. But you can hardly do that without a working trading strategy.

The Most Widespread Reason for Ineffective Trading Strategy

If your trading strategy is no longer profitable, more often than not, the most common reason is the dramatic change of market conditions. It is important to understand that a trading strategy is developed for certain trading conditions and there is no such strategy, which would work equally well 100% of the time.

You should not sit idly by and do nothing at the moment when the ratio of profitable deals significantly decreases.

You can notice that the trading strategy is not working, according to such parameters like the duration of transactions, i.e. the average time it takes to conclude one transaction.

If the duration of transactions significantly deviates from the average value, it means that cycles, for which your trading strategy was calculated, have changed at the moment.

Anyway, having noticed any changes in the effectiveness of your trading strategy, it is important to analyze your leverage and possible problems with the entry and exit of deals to maximize trading strategy performance.

How to solve the leverage problem?

Let’s assume that the duration of trade has decreased, just like the winning ratio, while the frequency of trades has remained unchanged. Let’s say that you have concluded on the average 4 deals per day, and this figure has remained at the same level. This might indicate the following problem: your leverage is too big for the current market volatility.

The solution to this problem is to reduce your leverage and also to set a deeper stop loss.

How to solve the entry problem?

Let’s assume that the ratio of profitable trades has decreased. The duration has also fallen, but the frequency of trades has increased. This could indicate that a false signal is being generated at the entry point due to increased market volatility.

In this case, you’ll need to make changes to adjust to the volatility. Consider choosing more suitable indicators to improve the strategy.

What is a solution for an exit from the transaction?

For example, if the ratio of profitable deals has decreased, the frequency of deals has also dropped, and the duration of deals has increased, it could indicate a problem. This may mean that the signal to close the trade is not sensitive enough. As a result, the trade stays open for too long. When market conditions change, the trader may start losing instead of gaining.

To prevent such situations and avoid large losses, you need to make the exit trigger more sensitive. It should work effectively, even in short periods

All attention to the trading methodology

A common problem for beginners is discovering a trading strategy on forums and using it without understanding the underlying methodology.

Someone might tell you that this strategy brought good profits in the past. But ask yourself, what assets were traded, at what intervals, and under what market conditions? Never use a strategy just because someone allegedly made money with it.

You must understand the methodology first, then apply the strategy. Never do it the other way around.

Start by understanding the market conditions for which the strategy was designed and if they suit you. More importantly, identify the market conditions that do not suit you. If the strategy is designed for those, don’t use it.

For example, if you’re making 8% profit in favorable conditions, it could result in an 11% loss under bad conditions. The problem is that if you don’t understand the strategy’s methodology, you may not recognize the difference between favorable and unfavorable conditions. This can lead to a 3% loss. So, consider if you should use that strategy.

You’d better develop your own trading strategy

Of course, the easiest option for any trader is to use someone else’s strategy. But how will you check if the strategy works? Will you rely on reviews from supposedly successful traders? Or trust the creator, whom you don’t even know?

Both options could lead to serious losses. Never blindly trust trading strategy creators. The best option is to understand what conditions are right for you, which assets you’ll trade, and what time frame works best. Once you’ve created your own profitable trading strategy, you’ll be able to make adjustments easily. You’ll understand its methodology and rules, which will help you maximize trading strategy performance.

Does your trading strategy provide an important advantage?

Finding the answer to this question is the most important question for any trader. The problem, however, is that no one can say for sure whether you have this advantage or not until you record your trades and trust the language of numbers.

Pay attention to indicators such as the time you enter a trade, the trading setups that trigger your entry, the time frame over which trades are made, the size of the position, the markets you trade-in, the direction of the trade, the exit price, the cost per tick, and so on. Analyze what results in the trading strategy gives you, whether they are acceptable to you. If you are losing money on it, you should either adjust it or stop using it.

Know the strengths and weaknesses of your trading strategy

Immediately put aside the idea that any trading strategy will always bring you profits. Strategies cannot work all the time, even if you are getting near-perfect results with them right now. Your priority is to determine the most appropriate market conditions.

Do the following:

• Determine your trading strategy methodology
• Understand which market conditions are favorable
• Identify unfavorable market conditions

The main objective is to reduce your risks to a minimum and try to catch the major trends in the markets in which you trade.

If you notice that the ratio of profitable trades has decreased, or if there are other problems in the trading strategy, which lead to unfavorable results for you, first of all, you need to make the necessary corrections as soon as possible. If you do this, you can then use your trading strategy to maximize trading strategy performance and make profits instead of losses in the future.