【FX Course】Just because you’ve been on a losing streak doesn’t mean you should change your method

Hello, I’m Leo.

When trading, you may feel uneasy after two, three, or four consecutive losses.

There are times when you think that.

Especially when a method that had been profitable suddenly starts losing, you get anxious.

But I believe that a losing streak alone does not mean you need to change your method immediately.

Every method has a “favorable market” and an “unfavorable market”

For example, suppose there is a trend-following method that targets pullbacks to buy on dips and sell on rallies.

In a strong uptrend,

this pattern tends to form, making pullback buys easier to function.

But what if the market moves into a range?

and it tends to lead to these outcomes.

Even with the same method, you may start losing more quickly.

But this is not that the method has broken

or
that you’re no longer in a favorable market

there is a possibility.

Three things I look at when I’ve had three losses in a row

For example, even a method with 60% win rate can have a losing streak.

Just because the win rate is 60% does not mean that you win, then lose, then win, then lose in a perfect alternating pattern.

In reality,

and so on.

Therefore, after only a few losses, saying", p t="75">"This method is no good"

is premature.

Three things I check when I have a losing streak

When you’re on a losing streak, rather than immediately changing the method, I would check the following three things.

① Did I really lose according to the rules?

This is quite important.

Three consecutive losses have happened.

But when you look at the details,

for example.

In this case, it’s less about the method losing three in a row and more about

possibility.

First, you must separate this.

② Has the market environment not changed?

Next, look at the market environment.

For example, until last month,

these trends made trend-following easy.

But this month,

became the situation.

In that case, even with the same trade setup, the results naturally worsen.

③ Did the same losing streak happen in past backtests?

This is where backtesting shines.

For example, you’ve tested for eight years, and

a method that could lose up to five in a row, but in actual operation it loses three in a row, so you change the method.

That is

This is what it means.

Frequent method changes make it hard to know what’s wrong

For example, you have a three-loss run with method A.

So you switch to B.

B also loses twice.

Then to C.

If you keep doing this,

as a result, you won’t know what’s wrong.

So, to improve, you need to keep the same rules for a while and collect data.

Win rate should not be viewed only as an overall measure

If I were you, I would not simply aggregate all trades to report win rates of 50% or 60%,

like this.

Then you may understand

which means it’s possible to not discard the method entirely.

You can skip ranges only.

Don’t make it a binary choice of use or discard the method

When a method stops functioning, you may think

"I won’t use it anymore."

But there is another option.

For example,

Even this alone can change how you use the method significantly.

Know from the start that there are periods when you won’t win

Every method has its fortes and weaknesses.

Therefore,

don’t assume you can win every month

is important.

For example, this month performance is slightly poor.

But backtests also showed similar stagnation periods in the past.

So, it isn’t abnormal.

On the contrary, if your results collapse beyond past levels, you should review it more substantially.

So when should you review the method?

I would review when the following conditions persist.

Not because you’ve had a few losses, but

that’s what matters.