I have a confession to make. 

It’s almost as disappointing as the ending to Game of Thrones, but… 

It’s something that ALL traders have to deal with, so I know I’m not alone. 

And to make matters worse, it’s something that Tomas and I talked about a few months ago in a BTA podcast. So I should have been watching out for this.

What is it?

They say a picture is worth a thousand words, so let me explain with a picture. Here’s a Lean Hogs swing strategy I started trading live right around the time of the red line:

Those with a keen eye will notice the strategy has recently exceeded its maximum historical drawdown, so I switched it off.

Now personally, I’m not too worried about this strategy failing, because I have others ready to replace it, but did I do anything wrong here?

Failing strategies are just a part of trading, so it’s no big deal. But, could I have done anything differently when launching this new strategy to either avoid this or reduce the impact to my portfolio?

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Earlier this year, Tomas and I released a podcast episode called “The WORST time to launch a new trading strategy“.

In the podcast episode, Tomas shares some of his own painful mistakes when launching new trading strategies, including:

  • The very worst moment to launch a new trading strategy (do this and your trading will suffer!),
  • The mistakes Tomas had to go through, so you don’t have to,
  • The approach he uses to launch new trading strategies and portfolios in his hedge fund and why you should consider using the same approach,
  • How sometimes the most counterintuitive approaches can be the best,
  • And how your psychological state can influence your trading performance.

The podcast is loaded with interesting insights on launching a new strategy, you can listen to it here.

Happy trading,

Andrew

 

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DISCLAIMER: Trading involves significant risk of loss and is not suitable for everyone. People can and do lose money. Hypothetical results have many inherent limitations. Past performance is not necessarily indicative of future results.

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