How to Recognize Trading Strategy Weaknesses

trading strategy weaknesses
Recognizing and identifying you trading strategy weaknesses is key to forming a proper trading approach.
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Recognizing trading strategy weaknesses is very important for every trader. We want to emphasize a very important point that most traders do not understand. It is exactly when they say that their trading system is profitable, but it sometimes has losing trades.

Note that such a system is unprofitable. If you constantly earn, and then, in a flash, lose everything, then it is unlikely that this is a profit strategy.

In order to better explain our point, we will suggest that you all imagine your trading account as a financial pyramid, profitable trades are new contributors. If you lose money, then your pyramid gets smaller.

One unshakable law of the financial pyramid is that eventually they all collapse.

Related: Taking Advantage of the Gaps on Forex charts

Trading strategy weaknesses

So, no matter how perfect your trading strategy is, sooner or later it will wipe out your deposit. Situations can be different – you might have done something wrong or perhaps the global economy had collapsed. Therefore, trading should be presented as a financial pyramid, different trading systems only give different account durability.

Your task is to attract as much money as possible and this could only be done if your system shows a positive dynamic of growth over a long period. We pay very little attention to the drawdowns and factors of their generators, but we pay much attention to increasing profits.

And this is a huge mistake. 90% of the traders are ready to risk even more, having an unprofitable deal to neutralize the loss already received, which is the cause of serious problems. 99% of the cases this is the main reason of losing your whole account.

When we think that our trading system is wonderful, we do not take into consideration our losing trades. We do not look at the patterns that can be avoided.

Related: Steps on Creating a Profitable Forex Hedging Strategy

How to avoid trading strategy weaknesses

Unfortunately, very often we pay no attention to the fact that the methods of neutralizing the drawdowns themselves are those mechanisms that are able to work stably and bring fairly good profits. In such way it is possible to minimize losing trades to minimum.

It is these observations that gave us two trading systems, based on the neutralization of drawdowns. As we said before, do not chase after exact entries, they do not exist.

You can work half a year with proportions 1 loss-making to 10 profitable orders, and in the second half of the year the proportions will change to diametrically opposite.

The theory of large numbers, gives us the opportunity to understand that in the Forex market all trading signals are relative and absolute only at certain timeframes.


It is better to build your trading strategy base on your own experience and your own mistakes. Following someone else’s strategy may not necessary mean that it will fit your trading style.

We are all having different way of thinking and observation. Find what system works best for you, modify it from time to time, and strictly follow it.

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