DAY 34: How to run a verification cycle that leads to practical implementation

On DAY 33,we explained how to adjust the rules based on the verification results, including concrete steps and how to avoid optimization traps.
However, trading is not finished once you have finalized the rules. The market is constantly changing, and your own lifestyle and mental state are continually evolving.
What becomes important is the“verification → modification → practice → re-verification” cycleand how to run it effectively.
Today, on DAY 34, let's look at how to operate this cycle concretely andhow to continuously update the method.

1. Overview of the PDCA Cycle

• P (Plan): Create or revise trade plans and rules
• D (Do): Actually execute trades (demo, small lots, or real)
• C (Check): Verify results (backtest, forward test, analysis of trade notes)
• A (Act): Identify problems and improvements, and revise rules or logic

By regularly cycling through the PDCA cycle,you can further refine winning patterns and eliminate losing patterns.

2. How to implement the cycle concretely

(1) P: Rule formulation & updates

1. Initial plan

   • Use simple logic such as moving averages × RSI × Fibonacci to create the initial rule.
   • Do a past verification (backtest) and a small amount of forward testing to finish with a level that won’t cause big damage.

2. Regular rule review

   • Once a week or once a month,at fixed timesreview verification data and trade history and consider updates.
   • Avoid major changes; try small adjustments one by one.

(2) D: Practice (real trades or demo)

1. Start with small lots or a demo
   • Don’t test with a large amount of money immediately; verify implementation status and stability with a small amount.
2. Commit to following the rules
   • Record honestly in the trade journal to avoid giving in to emotion, such as closing positions early or taking profits too soon.

(3) C: Outcome verification & analysis

1. Check indicators learned on DAY 32 such as win rate, risk-reward, drawdown, PF, etc. in an integrated way.
2. Classify “in what market conditions did you win/lose” (trend, range, preceding/after indicators) as well.
3. Trade journal: review emotional records to check for mental issues.

(4) A: Identify problems & plan next remedies

1. Patterns of increasing consecutive losses and big losing moments to focus countermeasures on.
   • Example: “Close positions 30 minutes before an earnings release or refrain from opening new ones.”
   • Example: “Set smaller lot sizes for highly volatile currencies.”
2. Don’t change many things at once; try improvements one by one
   • If adding an indicator, limit to one; if changing stop loss, limit to how many pips.
3. Re-test with backtest & forward test to confirm
   • Only implement those improvements after confirming they have a positive effect.

3. Timeframes & frequency guidelines in the operating cycle

(1) Daily or weekly light reflections

• Daily check: In the trade journal, briefly record “today’s total P/L and whether entry rationale was followed.”
• Weekly check: Roughly review win rate, total profit/loss, and market context (whether it was trending or ranged).

(2) Monthly or quarterly mid-scale verification cycle

• Summarize one month of history in Excel or similar, and tally by metric, time of day, and currency.
• Reconfirm reasons for large drawdowns and market conditions where winning patterns occurred.
• If issues emerge,consider small corrective measures.

(3) Semiannual or annual big review

• Check whether a method that worked six months ago no longer works, and whether market conditions have changed significantly.
• If multiple EAs are running,compare their total P/L, PF, and drawdown over long-term data.
• If needed, consider major changes such as a “drastic overhaul” or “introduction of a different method,” or even conclude that the current method should end.

4. For busy people: how to adopt a simple cycle

1. At minimum, monthly reflections

   • Even if you don’t have time to analyze every trade in detail, review logs at the end of the month to check win/loss trends.
   • Don’t rely on gut feeling alone; having objective numbers makes a big difference.

2. Phone-based management & Google Sheets

   • Record trade history by taking smartphone screenshots and using spreadsheets, then analyze on a PC at month-end.
   • Even if you’re short on time, you can input data during small gaps.

3. Regular EA reports to save time

   • Some EAs and analytics tools offerautomatic aggregation; export account history as CSV and use automatic charting.
   • For discretionary trades, add a simple entry history and combine to viewoverall performance.

5. Example: M's verification cycle

1. Daily: light notes

   • Notes like “Today’s profit +3,000 yen. EUR/USD short. No forcing due to indicator cooldown.”

2. Weekend: weekly summary

   • Put all trades in Excel, calculate win rate, P/L, PF.
   • Self-analysis: “Many losses were from GBP/JPY on a surge day, I held too long.”

3. Month-end: slightly more detailed analysis

   • Analyze by currency pair and time of day for win rate, drawdown, emotions at entry, and propose adjustments such as “widen stop by 5 pips” or “halve GBP/JPY lot size.”
   • Test these adjustments with backtests or small forward tests.

4. Every 3 months: big review

   • If EA struggles in certain market conditions with rising losses → adjust parameters
   • If discretionary win rate dropped due to busy work and less market watching, consider changing timeframes or other strategic directions

6. Summary & Next Time Preview

Summary

1. The cycle of “verification → practice → re-verification”(PDCA) should be cycled regularly to continually update methods and logic to adapt to market changes.
2. Small adjustments and re-verificationare essential. Large overhauls at once increase the risk of overfitting and loss of manageability.
3. Four layers: daily/weekly/monthly/half-yearly reflectionsmake it feasible for busy people to analyze without overburden.
4. Trade journaland aggregation toolsare key to understanding long-term changes and sustaining success.

Next time (DAY 35) theme: This week's summary & Q&A

• We will comprehensively review what we learned in Week 5 from “verification, verification, and more verification,”address questions from DAY 29–34, andorganize the key points.
• We will finalize how to combine trade notes, backtests, forward tests, rule revisions, and the verification cycle to apply to your trading.

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