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.
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