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Thread: Why do strategies fail despite being profitable in the past?

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    Default Why do strategies fail despite being profitable in the past?

    Why is that strategies that were formerly profitable all of a sudden becomes a losing strategy?

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Why do strategies fail despite being profitable in the past?

    It is of high necessity that any trader who wishes to become successful should have a personal (working) strategy in place. To become comfortable and be confident, the strategy should be certain of delivering at least seven winning trades out of every ten trades.

    Forex trading is a game of high probability and this is the reason behind the use of take profit, stop loss, and good skills of risk/money management. With the use of Price Action (PA) and technical indicators, the developed strategy is expected to have been well mastered to the point of gaining mastery over it.

    It is on this basis that that one is sure of the profitability of the strategy and the business (forex trading) in general.

    At one point or the other, strategies fail for some reasons which are as follows;

    -Not having a simplified strategy. Every strategy should be simple enough and very easy to apply or implement

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    -Insufficient practice may lead to unprofitability or seemingly failure of the developed strategy

    -Overconfidence is a serious threat in this case. After making consistent profits, there may enough temptation for one to feel overconfident thus not waiting for all the necessary conditions to be met before taking any cognate decision.

    -Lack of using trading journal effectively. Trading journal is meant to be used for evaluation and regular reevaluation of trading activities so that the future can be well projected

    -All these aforementioned require discipline, the ability of one to control his or her emotions, perseverance, and determination.

    In summary, strategies donít fail but the operator (or the trader) fails in most cases when all the aforementioned factors are not properly in place

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Forex trading strategy
    The forex trading Strategy is a technique that is used by forex traders to analyze the forex trading market, through the use of some given data to reach a conclusion of what the next possible market movement would be in order to enable them place trades in the right direction and make profits from trading the forex market. There are different Strategies that are used by different traders. Some traders uses the technical Indicators to analyze the market data or previous and current market movement in order to plot in order to know the direction to trade. Some traders may use data from news release while other traders may prefer to trade using the traders sentiment. It is better to actually make a trading Strategy that uses two or more of the analysis techniques to trade the market.

    Why does Strategies fail after been Profitable previously
    The forex market is dynamic, this means that there is a constant change in the market system. The market can draw a price pattern or chart following a regular pattern over a given period of time but later on, this may change due to the changes in different factors that drives the forex market. For this reason, it is important that traders always update their trading Strategies and trading knowledge regularly in the forex market so as not to be caught in the middle of losses due to a family trading Strategy that was previously profitable.
    Some of the things that can cause a Working strategy to fail are listed below and includes
    1. Change of factors that influences prices in the market
    2. See also: Invest in the most successful traders. More details.

    3. High level of uncertainties in economic indicators which drives market prices
    4. Change in attitude of the trader towards the usage of the trading Strategy
    5. Possible human error which can be committed by the trader unknowingly
    6. Change of trade plan utilized on the trading Strategy initially
    7. Greed and indiscipline can result to malfunctioning of a trading Strategy.

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Why do strategies fail despite being profitable in the past?

    Forex trading strategy is the technique by which the foreign exchange market analyzes the foreign exchange market, using some information provided to draw conclusions about possible future trends so that they can trade properly. Stay tuned and take advantage of forex trading. Different marketers use different strategies. Some traders use technical indicators to analyze market information or to analyze the market and past and current market movements to chart the direction of the business. Some marketers may use newsletter data, while others may make business decisions based on the traders' emotions. Better to develop a business strategy that uses two or more market analysis methods.

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    Why does the strategy fail since it was profitable in the past?

    The forex market is dynamic, which means that the market system is constantly changing. Over time, the market can design price patterns or graphs in a regular pattern. However, this may change later due to changes in the various factors that drive the foreign exchange market. Therefore, it is always advisable for traders to regularly update their trading strategies and trading information in the foreign exchange market, so as not to suffer losses due to previous profitable family trading strategies.

    Basic Reasons:
    • Improper practices can lead to unintended benefits or the apparent failure of a progressive strategy.
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    • Excessive conditions pose a serious risk in this situation. After long-term benefits, one may be tempted to feel more confident that one does not expect all the necessary conditions to make a scientific decision.
    • Affects market that affect prices.
    • High uncertainty in economic indicators that increase market prices.
    • A change in a trader's attitude to the use of business strategies.
    • Possible human error that may be accidentally caused by the merchant.
    • Changes in business plan, mainly used in business strategy.
    • Greed and discipline can lead to business disaster.
    • Lack of effective use of commercial magazines. A trade magazine means that the company is regularly reviewed and revised to predict the future.
    • All of this requires the discipline described above, his ability to control his emotions, his perseverance and his determination.
    • Basically, the strategy does not fail, but in most cases the operator (or trader) will fail if all the above factors do not exist correctly.


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    WHY STRATEGIES FAIL AFTER A PERIOD OF SUCCESSFUL TRADING

    One of the few things that is able to guarantee a trader's success creation possibility in the forex market is the ability to secure a trading strategy, and not just any trading strategy, but one that actually works. That being said, it is necessary that forex traders try to develop strategies and also put them to test so as to confirm that they actually work and are capable of creating success in the course of trading. Traders do not neccesarily need to put together too many strategies for a successful participation in the trading business, as such even a single trading strategy is able to generate continuous profit for a trader. Traders have the opportunity to make use of a demo trading account as an avenue through which they can develop a trading strategy and also backtest it with the market so as to identify it effective. When this is completed and fit for use, the strategy can then be applied to a live account for profit creation purpose.


    Irrespective of how effective a forex trading strategy is, the strategy is never capable of offering 100% success rate. A good trading strategy is one that has the ability to win in the market at least about 60% of the time. To this note, it is absolutely important that traders apply proper risk and money management systems to trading to reduce risk exposure and be on the safer side in the market. This is so because even the best of strategies have their bad days. However, with a win rate of about 60%, the profits made by a trader would do well to cover up for losses if and when they actually do show up. Traders might want to be careful of choosing to subscribe to trading services and systems that offers well about a 100% win rate in the market, remember the best market traders also have moments that they lose money. What actually makes a successful trader is not his ability to combine the best of strategies in the market, all that truly matters as far as success in the market is concerned is the trader's ability to use risk management to his advantage.


    Moving on, it is possible that traders experience events where trading strategies that used to be very effective in success creation begins to fail and can no longer replicate profit making. The particular strategy being used by the trader might have been properly backtested in the market which could also measure up to about 70% win rate as per live trading, but this does not in anyway protect the strategy from experience lack of effectiveness. While traders might still be applying the same method of trading they have always used with the same strategy that has frequently generated profit for them in the past, because of the ever changing nature of the market that same strategy can still become irrelevant.

    See also: Invest in the most successful traders. More details.



    Strategies may fail after a period of successful trading in the forex market probably because the market has made certain adjustment. A properly trained forex trader would understand that the market is always changing and so must stay absolutely informed of whatever goes on in the market. This is achievable by paying attention to the information about the market made available from time to time in other to improve trading knowledge. Traders that hold unto outdated information might find it difficult to adjust and make relevant changes to their trading strategy when certain changes occur in the market. When this happens, those sets of traders continue to lose money in the market and would consider their trading strategy a failure.


    Trading strategies might also fail in the market after they might have previously created success in the market due to negligence on the part of the trader. When a forex trader gets too comfortable with the market and begins to trade as though he controls movements of price, he might begin to express some non challant attitude in the market which might eventually be responsible for his losses. Traders that get overtly comfortable might begin to treat risk management as less important and will also take away some trading values which they used to identify as absolutely important. When this occurs, it is possible that a winning trading strategy might no longer fit into the same market as it used to and could begin to generate more losing trades.


    In conclusion, either it is due to the market adjustment as per it constantly changing nature or due to the negligence of a trader that a winning trading strategy stops working, it is educative to note that no trading strategy will actually last forever in the market forever. Successful forex traders understand this, and so they make sure to develop flexible trading strategies that can be easily adjusted for use when the time comes.

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Why do strategies fail despite being profitable in the past?
    Forex trading strategy failure is the number one reason why many traders fail in the forex trading market and there are many reasons why this happens, let's envision you've completely analyzed a bunch of rules and couple with a good trading plan that should lead you to complete trading success, You even ensure that all progression you take follows a famous or expert trading methodology with many energetic surveys and in the end, you hopelessly blow your trading capital. in this case who is at fault? is it the developer of the technique or you? despite the fact that the system has a very good track record.

    Reasons why trading strategy fails in the market despite being profitable in the past
    1. Poor Money management, in the forex market, is as important as having a trading strategy, and it must be made known to us that it's not possible to be successful in the market with the absence of money management regardless of how good you believe a trading strategy can be or was. There are many works of art or unique Forex methodologies that can be found on online platforms and sites and these systems are usually or frequently promoted as "SAFE HAVEN" for amateur traders and the individuals who search for methods of bringing in cash on the web, this strategies can range from swing trading system to scalping method. A few procedures truly create fair profit from the market, however just under explicit conditions, and many will not work out from some traders in a situation where they lack the proper money system that flows with the system.
    2. The absence or change of the right mentality, is another reason why a trading system can fail in the market, situation, where a trader changes their goals or targets or perhaps becomes more emotional in the market, can definitely bring some changes in the kind of result that trading system generates, and most time, until the mentality is set aright, the result will continue to be dreadful.

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    3. Changes in the market technology and approach, can also cause a trading strategy failure, in the past majority of traders focus a lot on the use of indicators (don't get me wrong many still do till now) which actually means back then technical price action trading is less effective, and now that many traders now begin to understand the idea of price action, many traders have somehow left out of the use of indicators.
      Likewise is the improvement of technology, The capacity to foresee changes in the market is the greatest shelter for money related traders. With artificial intelligence-backed solutions, Traders are presently proficient to take gain of prescient market analysis, and this lead to many systems being Voids(because of the Absence of major user)

    Bottom line
    There are some so-called forex trading frameworks available to be purchased on the web, prior to investing or trading in the live account with a trading strategy, ensure it meets your exchanging style, and if its a self develop a trading strategy, a constant strategy update can save you from some unjustifiable Loss
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