5 Tips to Refine Your Trading Strategies
Finding the best trading strategy isn’t easy. You go through multiple test runs, making tweaks as you go, only to find out that it doesn’t work as you hoped. It takes a while to build a trading strategy that you find successful most of the time.
Successful traders know when they need to refine their trading strategy, start over or continue with where they’re at. The hard part, though, is knowing what to tweak and by how much. Your broker might be able to help you with this, or you may be on your own (check out this MetaTrader 4 brokers list).
Need to change up your trading strategy? We have five tips to help you refine your trading strategies.
First, Give It Time
Before you begin refining your strategy, how long have you tested your current one? If you’ve only tested it on a couple of trades, that isn’t to say you need to change anything. Not only that, do you even have enough information to make changes?
It’s best if you give yourself time to get comfortable with your strategy. Doing this helps you in two ways – it allows you to gather more information for when you need to make a change, and winning or losing off of only a couple of trades could be a fluke.
Change the Timeframe
Your trading strategy will have a timeframe of how long you hold a trade, when’s the best time of day to start trading and when it’s time to sell. Because the markets can rapidly change at any given moment, your timing is crucial.
A small tweak of your timing could make a difference with your strategy. If you’re holding stocks too long, try reducing that time a bit and analyse the difference. Maybe you’re trading closer to lunchtime when the better option is to start when the markets open.
Make a note of time changes to compare what worked and didn’t work.
Change the Market
Your strategy might not be a problem. It could be the market you’re using the strategy on. Are you trading currency on the forex market? Maybe you’re more inclined to trading options, equities or penny stocks. Whatever the case may be, ensure your strategy is best suited for what you’re trading.
Instead of changing your strategy, test it out with a different market. See if you notice an improvement or not.
Tweak How You Determine a Trend
Trades tend to happen when there’s a trend, either upwards or falling. How you determine a trend plays a significant role in your success (or failure).
Change the tools you use to find the trend. It could be price action tools or a technical indicator like moving averages. Try a few out to see which works best for you.
Change Your Exit Point
A good trading strategy has an exit point. This point is when you cut your losses and exit out of a trade, even if you’re losing. An exit point helps prevent you from incurring even heftier losses.
Not every trade works in your favor. If you find you’re losing more than you’d like, maybe it’s time to lower your exit point to make your losses minimal.
Refining a trading strategy takes time and patience. Expect to have some losses during the process. It is those losses that provide valuable information to reduce them in the future.
Work alongside your broker to develop the best strategy. Test out top MT5 brokers in India to gain the most reliable experience.
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