My usual trading system continues to fail, what should I do?

A common system fails. If you define failure as not being profitable for a certain period of time, then this situation is quite normal.

Let me tell you a fact, which is also an important understanding about trading, that is, the reason why a system can always be useful is that it often fails.

Let me give a simple example, the turtle trading rule. This set of rules was made public at the end of the 1980s. In fact, it was not the book by Curtis Firth that was first disseminated, but another student of Dennis taught others by means of payment. And this incident made Dennis angry, and it was also an important reason for agreeing with Curtis to disclose this rule. Thus was born the book Turtle Trading Rules. However, at the same time as it was announced, many people said that once a set of rules is announced, it will become invalid. But is this the case?

In the first three years that the Turtle was published, the Turtle Law did not perform well, which also provides ample evidence for those who say that the Turtle has failed. But let’s take a look at the situation at that time. At that time, the concept of trading system was very vague in the minds of traders. Trading was almost a matter of betting on size. However, when such a system that created huge profits came out, many people would try it. , which presents a problem, transaction convergence. You can think about what will happen when the transaction converges, that is, the market will have no counterparty to a certain extent, and the turtle is a set of trend trading rules. Often no counterparty means that the trend cannot continue, so the market will be There will be a lack of volatility, or a narrow range. Sea Turtle is absolutely unable to make profits in the face of such a market. To make a profit, Sea Turtle needs to cooperate with a strong trend market, so it should be a bit miserable to use Sea Turtle in those three years. In addition, public opinion spread that Sea Turtle is invalid, so everyone basically agrees People have gradually given up on this method because of the saying that it will be invalid after publication. But the magic is that after most people gave up, there was no convergence in the market, and the trend began to appear again, and this set of rules began to restore its magical power. Curtis later released the 1993-2003 turtle income chart , the funds still doubled tenfold. So are turtles really out of order?

Back to the subject’s question, if you have your own trading system, then you should fully understand it, not just stare at its explosive output capability, but also know what it is most afraid of. For example, if you build a trend system, and the variety you trade has fluctuated in the past few months, then it cannot make money. Not only you, but anyone who uses a trend trading system, these few months This period is actually called the unfavorable period of the trading system. This period of time can be long or short. You may be okay if it is short, and you can still persist in a few weeks or a few months, but if it takes a long time, you will seriously doubt the system and even give up.

But what I want to tell you is that if your system is verified to be a positive income system, the unfavorable period of several months is really nothing. The great futures trading god I admire once showed me his futures account. He used the trend trading system. However, in the three years from 2015 to 2017, the variety of PTA has lost money. For those who are losing money, the k-first chart of these three years has indeed been turbulent for three years, and there is almost no decent trend, but only a wave of major trends in the single-year PTA in 2018 will cover all the previous wear and tear, and realize Profit, and there have been many trends in PTA in the past two years, and it has become the top-ranking variety in his configuration. I was very puzzled at the time, and I asked him why you still kept this variety because of the terrible loss of pta in the past three years, if it was me, I might have eliminated him in a fit of anger. He said that the loss of pta in the past three years was caused by the unsuitable market. Although this made me very uncomfortable, there was no way, because the market could not be controlled. Maybe he might start a wave of trends from the second day after I gave up this product. The market, and these three years are pta, and maybe the next three years will be the unfavorable period for iron ore. If I eliminate them all, I don’t need to do transactions, so I can only rely on fund management to wait for the uncertainty. As long as the market that belongs to me comes, just don't be eliminated before then.

My own trading often has consecutive losses, and sometimes there will be a wave of smooth trend profits that appear in half a year, and it will give me wear and tear in two months. I've been there, but like I said, it's pretty normal when you get to know your system well enough. As long as the long-term implementation is logically expected, then there is no problem. Improve your own awareness, treat losses reasonably, use risk control methods to manage them reasonably, give the system time to let it exert its power, and the market will reward you.

Are you satisfied with this answer?

System failure is a headache, but failure is a normal thing. If you are doing a trend, it will fail if you encounter shocks, if you are doing shocks, you will fail if you are in a trend, and the others are the same.

In the process of implementing the system, the failure should have been expected. If it is in the normal expectation, sticking to the system is naturally a normal choice.

What if it exceeds normal expectations? It is inevitable to wonder whether this is a long unfavorable period or the system has failed?

I admire a simple system, and a system that is too complex has a higher possibility of failure, which is the so-called over-optimization. In addition, if the system is established based on statistics, it is estimated that it is not easy to judge at this time. My system is built according to my logic, so I will talk about my judgment method.

The establishment of the system has a target market, and the market is ever-changing. It is not enough to judge only based on the usual unfavorable period, so it depends on the state of the market.

For example, the trend system will obviously not perform well in market shocks, and the shock system is also generally effective in trends. If the state of the market is not in line with your target price, then it is normal to fail.

In this case, unless the market is no longer moving in the direction of your target market, it is too early to talk about abandoning the system. As long as the market is still in shock, the shock system will be useful. Others are the same.

If this market is difficult, it is best to control risks in fund management. Of course, if it is so powerful that it can be replaced with different systems according to market conditions, then I have nothing to say.

What you really need to worry about is that there is a systematic target market in the market, but you can't make a profit. There may be a problem at this time.

In fact, even the trend system cannot capture the trend, and the shock system cannot capture the shock. It is normal to miss the market. Trading profit and loss is the result of the combined effect of profit and loss, so there is no need to be entangled.

But if you miss the target market too much, you should reflect on it. Is it because the time is missed? Is it because of the fear of entering the market and the fear of missing out on holding positions? Is it because of insufficient funds? Was it missed because of a technical issue? Is it because the indicators are not working and missed?

After finding the problem, you can adjust it according to the actual situation.

I bet that the trading system referred to by the subject is not a trading system at all, it is probably some kind of trading strategy or even just a certain trading signal. The trading system is a large system engineering, and the trading system can only be described by advantages and disadvantages, or positive expectations and negative expectations. The advantage of systematic trading is that once you form a certain trading system, even if it is a system with disadvantages or negative expectations, you can slowly polish it into a system with advantages and positive expectations, so the stability of the trading system is the most important. will not fail. The only thing that can fail is the trading signal, and the bigger one can be said to be the trading strategy.

The trading system has three elements, technical analysis, fund management and trading psychology training, and I will add one more to it, trading philosophy. The trading concept is the decisive thing here. It determines your three views on the trading world. All the methods and methods you will adopt in the future will be because it conforms to your trading philosophy rather than because of how much it can make money. Fund management is an essential thing that determines whether you make money or not. If you do not manage funds well, you will not be able to make a profit no matter what. Trading psychology is a guarantee, and a psychological quality that can keep calm and rational at all times will escort your trading career. The last is technical analysis. No matter how good the technical analysis is, it will only make your operation accuracy infinitely close to 50%, which is not much better than directly flipping a coin to make a decision.

The so-called trading strategies are mostly embodied trading signals. The simpler ones only include entry signals, and the more complex ones also include signals for exiting the market and adding and reducing positions. Some people call it "quantitative trading". In the eyes of the vast majority of novices in trading, various trading strategies are secret martial arts secrets of trading masters, the scriptures of nine Yins in the trading world, and the most mysterious things. But few people will believe that trading strategies do not even account for one-tenth of the trading system. It is common for trading strategies to fail. If a certain trading signal is used by too many people, it will indeed be passivated and invalidated as many people advertise. Therefore, when a trading master is about to sell a trading strategy, probably That's when he discovered that the strategy was about to fail.

In the trading market, no one can use the same trading strategy or trading signal for decades to achieve stable profits. When a certain trading strategy becomes passivated, resulting in poor signal stability, and the market always develops in the opposite direction after entering the market, it is necessary to abandon the strategy without hesitation. The main question is whether there is a trading system that can make stable profits, yes. An advantageous trading system first has a good fund management strategy, which is equivalent to giving yourself an insurance, first to be invincible, and then to develop slowly. Secondly, the technical analysis system of an advantageous trading system is also a systematic theory from concept to method, which can give adaptive signals according to the development of the market. The so-called mechanical trading is by no means a rigid transaction, but a flexible transaction under a fixed framework. For example, in my trend tracking system, the technical analysis method is based on fractals, which divides the market development into different forms according to the price form, and judges the development stage of the trend. If there is a new situation, it is just adding a new sample to my trend form. , the trend is eternal.

The answer to this question is very simple, let me talk about an example first. In that year, I was still trading domestic spot agricultural products in Chifeng commodities. In my spare time, I used a set of trend system to review Chifeng commodities. I applied this trend system to review all time periods and all commodities on the market, and found that The correct rate of this trend system is as high as 33% to 45% (different correct rates are caused by different time periods). I felt like a treasure at the time, and I felt that I could use this system to make a lot of money in the market. However, when I applied this system to another spot agricultural product market, Shouguang Fruit and Vegetables, the correct rate could only reach 18%. Most of the time, following a unilateral trend, the correct rate of applying the trend system is naturally high. Shouguang Fruit & Vegetable trades sideways most of the time, and the correct rate of applying the trend system is naturally low.

Your trading system must focus on a trading trend, either unilateral trend trading, or sideways adjustment trading. If it continues to fail, it means that your trading system is very low in fit with the current price trend. It is recommended that you wait until the price action matches your system before using your system.

In addition, the trading system has only two usage modes. One usage mode is that traders have two systems at the same time, a trend trading system and a sideways adjustment system. Use the sideways adjustment system to adjust the trend. Another usage mode is to have only one trading system, enter the market when the price fluctuation pattern is suitable, and exit the market if the price fluctuation pattern is not suitable.

The trading system is not the key, the key is whether you can identify the trading opportunities suitable for your system, or whether the current price fluctuation is suitable for your trading system. If it is suitable, do it again, if it is not suitable, go out and wait.

Every trading system is unwilling to adapt to all market conditions. The reason for frequent stop loss is either that your trading method is wrong, or your trading system is invalid for the current market situation.

This kind of problem in the trading method should be mainly caused by frequent trading, so the best solution is to reduce the trading frequency or simply give up trading temporarily to calm yourself down.

If it is caused by the trading system, in addition to reflecting on and correcting your own trading system, you should also do the following for the current situation.

1. Expand the stop loss point

For a trader, if his stop loss is 1 point after entering the market, the probability of his stop loss will be very high, because it is easy to trigger a point. If he changes this one point to 10 points, then his stop loss frequency will definitely decrease, because the probability of triggering one point is different from the probability of triggering 10 points. This one is easy to understand.

Of course, the disadvantages here are also easy to think of. His stop loss frequency has decreased, but the amount of his single stop loss has increased.

2. Change the admission rules

If a trader's style of trading is to enter yesterday's highs, then he may often hit the entry conditions, and may trade many times a day. As the number of transactions increases, the number of stop losses will inevitably increase. On the contrary, if he can change the entry to enter the market after breaking through the 20-day high, his trading frequency will immediately drop, and his stop loss times will of course decrease accordingly.

3. Add filter signal

Of course, in this process, he can also use the method of adding filter conditions. For example, breaking through yesterday's high point to enter the market has become, while breaking through yesterday's high point, the moving average will also have a golden cross. In this way, the number of transactions will be reduced, and frequent stop losses can also be avoided.

4. Change transaction parameters

Some people may not have a fixed stop loss point, and the entry conditions are also objective, for example, a trader who uses the moving average crossover pattern. He only looks at moving averages and K-line trends. In this mode, he can achieve it by adjusting his trading parameters. For example, if it is the cross of the 5-day moving average and the 10-day moving average, it can be changed to the cross of the 5-day moving average and the 40-day moving average. In this way, the frequency of stop loss will naturally decrease.

5. Change the trading cycle

This is easy to understand. A trading system that trades on a 5-minute cycle is very easy to stop losses frequently. If it trades online for 1 hour, its trading frequency will decrease. If trading on the daily line, his frequency is reduced again.

These four methods all reduce the transaction frequency.

Summarize

The above two methods are the most fundamental solutions, and some people say that they can be avoided through careful analysis and careful judgment. Let’s not talk about careful analysis, carefully judge whether the winning rate can be improved, even if it can be improved, it is essentially a way of filtering, which is the second mode above.

A trader needs to have sufficient confidence in his own trading methods, and he needs to understand his trading cycle and trading level. If he is already a little stop loss, then he can only refuse to be stopped frequently by adding filters. If he doesn't want to change the entry and exit, then he needs to increase the amount of loss he bears.

But for those who have already formed a trading system, most of the conditions added to avoid frequent stop losses will have some other attributes. For example, the first item above is to change the frequency of being stopped, but it leads to an increase in the amount of a single stop loss.

If you have a complete trading system, the frequent stop loss may be caused by the unfavorable market trend recently, and sometimes it does not need to be adjusted, but if the trading system is not perfect, then fine-tune the trading system according to the above-mentioned situations to make it follow Just match your trading habits.

It is normal for the trading system to fail, just stop the loss if it fails. As long as your trading system is profitable in the long run.

After having a stable trading system, I also thought of many ways to optimize or research a new system, but every time I ended up losing money, and finally found that the original configuration was good. This may be because people who trade have relatively high moral quality One of the factors.

Then think about why it failed? Because this trading system is summed up after many losses, and it has been used for many years, the ideas and trading concepts in it have been deeply ingrained, and habits and beliefs have been formed. Faith is difficult to change, once you change, you will be confused and lose confidence. Therefore, major changes to the trading system were rarely made later, only some technical adjustments were made, and no changes in concepts were made.

1. Each trading system has its own characteristics in actual trading.

• l Single type: single variety, single model, single corresponding trend

• l Composite type: multi-variety, multi-mode, multi-corresponding trends

In fact, many traders have never thought about what a trading system is. This is why I find most purely mechanical system inductions annoying. After the principle, it seems to have got the will of God, and then I don’t think about anything else. Basically, all the energy is put on optimizing the execution. To be honest, this energy is not worth it. Generally I think so:

1. For a trader, risk always comes first! Therefore, transactions must have a conservative risk control.

2. Second, the purpose of our trading is to make a profit. If we want to make a profit, we must have a complete trading model. We need to establish a good trading system. After establishing the trading system, we know our historical continuous loss, the maximum return withdrawn. The next step is to develop a reasonable fund management system based on your own trading system

3. The last point is execution. Strict execution. Next I will explain one by one.

1. About the trading system

Let me first talk about how to build a trading system and what problems need to be dealt with when building a trading system. So what is the purpose of building a trading system?

The author personally believes that the purpose of systematic trading is to better avoid and eliminate the impact of mentality on trading. After forming a trading system, clarifying historical retracement, maximum loss, and quantitative solidification trading can greatly reduce the impact of mentality on trading. Influence.

Let's put it this way, in a perfect trading system, there is no such thing as mentality. In fact, it can also be said that it has broken through the barrier of mentality. In systematic trading, all systems are specific, standardized, and quantified. To execute, just like going to work, the transaction should wait and wait, then the transaction will become easier.

2. In this way, the biggest bottleneck of the transaction

It is how to form a systematic transaction. Many times when we build the system, we will have constant problems, how to standardize, how to be specific, how to completely solve the problem of system consistency, and how to still have good returns and a good winning rate under these conditions. and profit-to-loss ratio.

This involves how to form a correct market cognition, here requires a lot of reading, a lot of learning, don't plunge into the market, get into a trading circle, get into the horns, and trade dead.

The formation of the system is actually like solving a math problem. Each problem will have multiple ways of solving the problem. When you reach a dead end, you may never be able to solve the correct answer. At this time, you must improve your cognitive height. The market is actually Like a forest, if you get into it, it is difficult to get out without road signs, so we raise the height, stand on the top of the mountain and look at it, first observe the market, plan the walking route, and then practice, so it may be easier to get out of the market , form a trading system faster. After the system is formed, verify your own system, review it again and again, summarize the problem-improvement-summarize-improvement-review..., it takes a lot of effort to take shape here, the formation of each system It’s all about replaying, constantly looking for problems.

Solve the problem of consistency, deal with the balance of probability and profit-loss ratio, deal with the balance of price on the horizontal axis and time on the vertical axis, deal with the balance between trading and life, etc.

Therefore, for an excellent trading system, it is not only to satisfy the transaction profit, but more importantly, to satisfy the life. To make a living by trading, his main body is still life, so let trading be as simple and easy as a favorite job. Only in this way can it be regarded as an excellent trading system.

3. Fund management

Fund management is based on the trading system. Through the understanding and cognition of your own system, you can know the largest continuous loss and the largest drawdown in the history of your own trading system to judge fund management and position.

This requires a lot of review, ten years of historical data or longer. For example, in my personal system, the largest consecutive loss in ten years of history is six orders, the profit-loss ratio is more than 1:2, and the winning rate is about 50%.

However, the number of stop loss points is not necessarily the same, so a fixed stop loss amount is used for asset management here, that is to say, the stop loss amount of each order remains unchanged, and the operation can be changed. And according to Wall Street's requirements for traders, the withdrawal of funds should not exceed 20%, that is to say, as long as the maximum continuous loss range does not exceed 20% of the total funds, it will meet the requirements of Wall Street. Then 20% divided by the maximum continuous loss is the single loss amount, so it is OK to control the single loss within the range of 3%-4%.

Fund management is to stop loss with a fixed amount, and the single loss limit is about 3%. And combined with risk control sub-warehouse operation. In fact, after the system is established, traders will naturally manage funds according to the characteristics of the system.

If a trading system built by myself often fails and causes losses, should I abandon this system and replace it with another one? Is there a stable and profitable trading system?

Let me tell you about my own personal experience, hoping to inspire you.

First of all, it is normal for the trading system to fail, and my trading system often fails, just stop the loss when it fails. As long as your trading system is profitable in the long run.

After having a stable trading system, I also thought of many ways to optimize or research a new system, but every time I ended up losing money, and finally found that the original configuration was good. This may be because people who trade have relatively high moral quality One of the factors. Then think about why it failed? Because this trading system is summed up after many losses, and it has been used for many years, the ideas and trading concepts in it have been deeply ingrained, and habits and beliefs have been formed. Faith is difficult to change, once you change, you will be confused and lose confidence. Therefore, major changes to the trading system were rarely made later, only some technical adjustments were made, and no changes in concepts were made.

Each foreign exchange trading system has its own characteristics in actual transactions.

1. l Single type: single variety, single model, single corresponding trend

2. l Composite type: multi-variety, multi-mode, multi-corresponding trends

In fact, the biggest difference lies in the "corresponding trend", similar to one being a sniper rifle and the other being a shotgun. It's all about improving your odds...

Different trading systems have different key observation objects and require different data. I once tried to log in together, and log in to whichever system I encountered, but I found that my brain couldn't react. Everyone wants to do it, but no one can pay attention to it. So here I am, and keep using one until it fails, or finds a faster and better way to make money.

Multiple systems are forced out. So I spent a lot of time researching new arbitrage methods from scratch. As a result, basically no money was made this year.

I thought it was a fresh trick, and I could eat it all over the world. But suddenly it failed. With this experience, I am even more frightened. You don't know when the method you have mastered now will be finished again. Maybe others don't care, but for people like me whose current capital is not large enough and who rely on the foreign exchange market for all their living expenses, they still have lingering fears. This year, it seems that money is not enough to spend.

But there is no good way to do this. Because you don't know which direction the market will change in the future, you can only talk about planning for a rainy day, and just respond according to the specific situation at that time. So it is nonsense to prepare a few more trading systems. It can only be that the existing basic system is intensively cultivated, and a little digging is a little bit.

It took me almost two years to learn the technique of moulding, before I dare say that I am proficient. This time, it took just over four months to start researching from scratch until it became profitable. Therefore, a solid foundation is the key.

In fact, many foreign exchange traders have never thought about what a trading system is. This is why I find most purely mechanical system inductions annoying. After the profit principle, it seems to have got God's will, and then I don't think about anything else. Basically, all my energy is put on optimizing execution. To be honest, this energy is not worth it.

A good trading system is still the key to the treasure in a specific type of market, not only in the past, but also in the present.

If you have acquired a trading system and are still not profitable in the market, it is most likely because you have an unprofitable system. The reason is that traders have not been able to conduct continuous follow-up research on this system over a long period of time to observe whether it is a profitable system.

So why do those traders who have a system that works, is profitable, and trades commodities in a reasonable way still have no idea how to make money? Let's move on.

1. Don’t let stress break the rules of your system

If you have a working system and are losing money in the market, chances are you are losing control - not following the rules of the system. There are many factors that can throw a trader out of control, the main ones being stress, throbbing, and money.

Stress is unique and unusual for a trader. No matter the amount of money or the outcome of the transaction, the pressure is so great that traders suspend intellectual judgment and turn to their emotional side, thus forming emotional trading. Whenever a trader puts money in the direction of decision-making, it will automatically create a pressure that no one can imagine, and your heart and spirit will also increase. You no longer follow the pressure of the system.

2. Admitting your mistakes is the biggest difference between you and a failed trader

Any trader can conduct research, whether technical, fundamental, or some other type of research, and use it to determine where the market is going. It is easier for a trader to form a market view than to change his attitude and exit a market position he was in.

When a trader makes a judgment in the market, the human brain will do various things to strengthen your rational thinking. Therefore, when this judgment is no longer valid, the counter thinking from the trader himself will make him always think of more reasons to stick to it.

Therefore, traders must always follow the market. When the market tells you in absolute terms that your rational decision is wrong, then your next rational decision must jump out of this market position or change your opinion.

3. Fund management cannot be ignored

Proper money management involves investing a certain percentage of your money in different trades, whether they are bullish or bearish, always keeping the same number of contracts. After all, you can be right and you can be wrong in the market. Whereas poor money management is all about throwing everything at your fingertips and hoping and praying that you've made the right choice, poor money management will undoubtedly make you lose money very quickly.

If the trading system fails, there must be a bug, then it is necessary to sort out the strategy from scratch, or overthrow it and create a new one. In short, the market is correct. If you want to obtain a strategy that can finally close the trading loop, the test needs to be obtained through continuous market verification.

Let me first talk about how to build a trading system and the bottlenecks that need to be dealt with when building a trading system. The bottleneck of trading lies in how to solve the influence of eliminating mentality on trading through the trading system. Let's put it this way, in a perfect trading system, there is no such thing as mentality. In fact, it can also be said that it has broken through the barrier of mentality. In the case of system trading, all systems are specific, standardized, and quantified, and implemented at the point. It’s OK, so it won’t affect emotions too much. In this way, the biggest bottleneck of the transaction is how to form a systematic transaction. Many times when we build the system, we will continue to have problems, how to standardize, how to be specific, and how to completely solve the system. Consistency issues, how to meet these conditions and still have good returns, good win rate and profit-loss ratio. Then this involves how to form a correct market cognition, which requires a lot of reading and learning. In the following words, I will summarize a set of ideas for forming my own trading system. In fact, when trading, don’t plunge into it. In the market, get into a trading circle, get into the dead end, and trade dead.

Forming a system is actually like solving a math problem. Each problem has multiple ways of solving the problem. When you reach a dead end, you may never be able to solve the correct answer. At this time, you must improve your cognitive height. The market is like A forest, drilled in, it is difficult to get out without road signs, but we might as well raise the height, stand on the top of the mountain, or take a plane, first observe the market, plan the walking route, and then practice, it may be easier Get out of the market and form your own trading system. Then go to verify your own system, review the trading over and over again, summarize the problems, and review and summarize the problems again. It takes a lot of hard work to take shape here. When I formed the trading system, I continued to review the trading system for half a year, constantly looking for problems. . Solve the problem of consistency, deal with the balance of probability and profit-loss ratio, deal with the balance of price on the horizontal axis and time on the vertical axis, and deal with the balance between trading and life. What I mentioned earlier is the bottleneck in trading cognition.

In fact, the system is also divided into good and bad. A real trading system is not only about pure profit in trading, but also how to control risks, how to define fund management, and how to achieve harmony between trading and life.

Here we will analyze one by one, for a trading system, risk control is essential Profits may fail, and here we can deal with these risks by avoiding or diversifying funds.

Let's talk about money management. Fund management is based on the trading system. Through the understanding and cognition of your own system, you can know the largest continuous loss and the largest retracement in the history of your trading system to judge fund management and positions. Here you need a lot of review , ten years of historical data or longer, for example, the following system I personally trade with a fixed loss amount, and the largest consecutive loss in the ten-year history is six orders. According to the requirements of Wall Street investors, the withdrawal of funds should not exceed 20%, so That is to say, as long as the maximum continuous loss range does not exceed 20% of the total funds, it will meet the requirements of Wall Street. Then it is OK to control a single loss in the range of 3%-4%. This is how the position is reversed by the system

Let’s talk about the profit-loss ratio and winning rate. Excluding the transaction cost of 1:1 profit and loss, a winning rate of more than 55% can be profitable, and a 1:2 profit-loss winning rate of 35% can be profitable. and so on. Then after these processes are completed, we need to consider the balance between transaction and life. Living by trading, the subject is also life, and trading is only to satisfy life. So how to deal with transactions and life is also an important part of the system.

Your trading system is not perfect enough, it is only suitable for the market in a certain period

If it fails, you will give up, and if you lose money, you will cancel the account? The trading system itself will go through a process of continuous polishing, and failures and failures are all normal phenomena that the system should have.

Of course there is stable profit, but it is not achieved overnight.

1. For a system that has already made a profit in actual combat, a large number of backtests and full backtests must be carried out in daily use

It is best to conduct a backtest on the varieties operated, or even all other varieties that can be touched, to see how the worst performance of this profit system will be, and then take targeted countermeasures.

Also consider the worst case, even if the previous market has not been so unfavorable, it needs to be taken into account. Then think about how to properly solve it under such unfavorable conditions. It is best to be able to solve it. If it cannot be solved, it is necessary to further consider under what circumstances the system must be stopped or replaced.

2. According to the rhythm of market fluctuations, consider regularly adjusting the system

Actively track and participate in monitoring the volatility of varieties, actively analyze the volatility of account funds, and then actively adjust the system according to the revised rules.

The trading system is composed of a series of rules. When formulating and confirming these rules, a lot of preparatory work should be done well, but the unchanging rules are prone to problems, so it is necessary to formulate rules for modifying the rules. That is, when any situation occurs in the market, when any problem occurs in the capital chain, it is allowed to modify the rules, and at the same time, it is necessary to formulate the conditions for how to modify the rules, to what extent and how much to modify the rules.

Thank you. First of all, system failures are normal and often occur. At this time, there is no need to be nervous, and there is no need to rush to replace your system. After each failure, you will find that most of the failures are caused by you not following your own rules. The other part is caused by the principle of system trading, and the other part is normal failure. After all, there is no 100% successful system and technology in the world. It is good to make notes on single trading and make corrections to gradually increase the winning rate.

Continuous failure can only mean that your system has bugs, so you have to optimize it, otherwise what else can you do?

There should be a stable profit system, as long as you can set a standard for stability. You said whether Mr. Ba's system is stable, his compound annualized return for more than 40 years is close to 20%.

Generally speaking, a trading system must be logically self-consistent. If you don't even understand the core principles of making money in the market, then your system is of course scumbag.

The system includes various aspects, such as position rules, fund management, trading mentality, etc. Of course, the most important thing is to reflect the core concept of cutting losses and letting profits run.

It is also worth noting that it is necessary to look back at historical data, which is not just a requirement for trading strategies. The yield curve in the back look is more informative.

A system that can be profitable in theory may result in negative expectations due to some factors that you have not considered. Therefore, rolling testing with historical data is an essential part of developing a trading system.

In the specific test, we take the transaction cycle as the benchmark and provide sufficient historical data and transaction data to ensure the validity of the sample data.

Conduct multi-cycle tests on the same system. If a system can be profitable on the H1 cycle, but not profitable on the H4 cycle, it means that the system is very doubtful, and the profit on the H1 cycle may not represent the system. The nature of the profit, in other words, the advantage is not significant.

To test the same system in multiple markets, the profit in one market may not be the same in another market, but if the gap is too large, it means that this system is also very doubtful. A good system, after fine-tuning the rules, will Can adapt to different markets.

Historical testing can consider the capability, reliability, and usability of a system before the actual offer, and can also help us provide direction and guidance for system improvement.

I think a correct concept can be used for the old, but a single trading system may not be used for the old! To give an example: a country has a good system, which can allow most citizens to live a good life, but there will still be some people who become beggars. A good trading concept is like a good system, and a set of trading systems are like all citizens. You cannot guarantee that your trading system will not become that beggar. So it is quite difficult to think once and for all.

In the process of foreign exchange trading, if a trading system built by myself often fails and causes losses, should I abandon this system and replace it with other systems you introduced? Or keep going?

Before answering this question, let me clarify one thing in the description of the problem. There must be a stable trading system, but even so, no one can guarantee 100% correctness. The problem lies in the word "stable". In a word, it means that as long as you can make profits in this market for a long time, it is stable.

The trading system is only in the early stage of construction, and it is often encountered when the trading system fails during the trading process. But for the masters, not only will they not panic at this time, but they will feel excited. In the trading process, especially after the EA quantitative trading is formed, it is very passive. The next thing they have to do is to continuously optimize the trading system and strive to make it perfect, so as to remove the disadvantages and make it profitable for a long time instead of focusing on temporary gains and losses.

In fact, there are two main points of confusion.

One is to change the trading system, fearing that trading without familiarity and still groping will cause greater losses.

The other is to optimize the trading system, but I don't know what a perfect trading system looks like, and what aspects should be optimized.

In fact, a perfect trading system generally has the following characteristics:

First, stability, which is mainly manifested in the stability of income. During the trading process, you can earn a big market, but there will be no big retracement. All the factors that can bring huge risks to the transaction have been shaved off.

Second, purity. Making money is a simple matter. The trading process must be pure, without any impurities mixed in. When the trading system is perfected, the things to be done every day are pure To implement your trading system.

Third, repetition and simplicity, making the formulation and execution of trading plans more stylized, all traders have to do is to execute your trading plan and monitor the trading process. Simple and repetitive, but effective.

A complete trading system includes three aspects: trading system, risk control system and monitoring system. Therefore, what the subject of the topic encountered should be problems with the trading system and risk control system, especially the trading system, which is the premise of all trading systems. Then the next focus is on why there are failures in the trading system, optimize them, and then transition to optimizing your risk control system. As for the supervision system, if the subject is an individual transaction, then this is your own supervision. If it is a team, a separate supervision department may be set up.

The purpose of systematic trading is to better avoid and eliminate the impact of mentality on transactions. After forming a trading system, clarifying the historical retracement, maximum loss, and quantitative solidification transactions can greatly reduce the impact of mentality on transactions. In a perfect trading system, there is no such thing as mentality. In fact, it can also be said that it has broken through the barrier of mentality. In systematic trading, all systems are specific, standardized, and quantified, and they are implemented at the point. Just like going to work, the transaction should wait and wait, so the transaction will become easier.

If you want to build a correct trading system, you need to form a correct market cognition, which requires a lot of reading and learning. Don't plunge into the market, go around a trading circle, dig into the corner, and die.

The formation of the system is actually like solving a math problem. Each problem will have multiple ways of solving the problem. When you reach a dead end, you may never be able to solve the correct answer. At this time, you must improve your cognitive height. The market is actually Like a forest, if you get into it, it is difficult to get out without road signs, so we raise the height, stand on the top of the mountain and look at it, first observe the market, plan the walking route, and then practice, so it may be easier to get out of the market , form a trading system faster. After the system is formed, verify your own system, review it again and again, summarize the problem-improvement-summarize-improvement-review..., it takes a lot of effort to take shape here, the formation of each system It’s all about replaying, constantly looking for problems.

Solve the problem of consistency, deal with the balance of probability and profit-loss ratio, deal with the balance of price on the horizontal axis and time on the vertical axis, deal with the balance between trading and life, etc.

Therefore, for an excellent trading system, it is not only to satisfy the transaction profit, but more importantly, to satisfy the life. To make a living by trading, his main body is still life, so let trading be as simple and easy as a favorite job. Only in this way can it be regarded as an excellent trading system.

There are at least three or four mature and stable systems. Confirming each other, it can deal with shocks, true and false signals, slow as a snail, and all kinds of extreme market conditions.

First of all, it is necessary to distinguish whether it is a fish head or a fish tail on the daily K-line. When placing an order in a short-term 5-minute trade, do not rely on the indicator any more. Instead, you must look at the K-line on the K-line and wait for the N-shaped order to appear. The middle line is higher than long, and lower than short, and the market deduces and changes into medium and long-term trading.

It's not that the trading system is malfunctioning, it's that the market has changed, and the market has not kept up with the rhythm of the market. The trend of the market has become volatile, which is very torturous. After the torture, he left according to the established market.

If the system fails, first consider whether it is an objective reason. For example, if you encounter some uncontrollable factors, this situation is not the reason of the trading system. If it is not an objective reason, then consider the subjective reason, such as whether it is your own fund management, Failure to do well in risk prevention and control, or lack of self-discipline and emotional trading caused by disordered mentality will have a certain impact on the success rate of the trading system.