Do You Need A New Trading Strategy In 2024

The online trading industry is booming with more folks than ever looking to get involved and start making an income from trading the financial markets.

With this, there are more trading strategies than ever before being published online for new traders to try, test, and deploy within the markets.

This is great and really reduces the barrier of entry into the industry, but it does lead to many traders jumping from strategy to strategy, never really testing a single approach or giving it the time it needs to generate consistent returns.

In this article, we are going to look at whether you need a new trading strategy in 2024, where to find your strategy and when you should stick with your existing strategy. So, let’s get into it!

A New Trading Strategy In 2024 – Do You Need One?

Retail traders are renowned for ‘shiny ball syndrome’. This essentially involves traders constantly changing their trading strategy every few weeks or months and never really progressing in terms of generating profits.

This is easily done as a trader when everyone online seems to be making much more money than you – it’s sometimes an obvious move to copy their strategy but it’s not always wise.

When you move to a new trading strategy, you’re starting again from scratch and resetting your experience with a strategy to 0. This often leads to traders being in the markets for many years without seeing any progress. 

With that being said, sometimes changing your strategy is the best thing for your trading and needs to be done if you’re looking to seek consistent profitability and become prop firm funded.

When To Change Your Trading Strategy

So, when should you look to change your strategy? This is a complex question with no simple answer.

1. If you’re unprofitable over the long term.

   If you’ve been trading the same strategy for many months (6+) in the live markets and the strategy is not earning you any money, it’s time to change. However, you need to be honest and objective. Is the reason it’s not earning profit due to the strategy, or are you missing trades, mismanaging setups and not being perfect with your risk management? If that’s the case, you need to change your approach as a trader, not your strategy.

2. If your trading strategy does not suit you.
   
   If your trading strategy doesn’t suit you personally, it’s time to change. For example, if you’re swing trading and holding trades over the long term but you’d prefer to be in and out everyday because you’re sat at your desk all day anyway – you should adopt a different strategy.

   Likewise, if you’re missing trades on the M15 timeframe because you’re always at work – maybe swing trading would be a more sensible approach to ensure you don’t miss trades.

3. If the backtest data is unprofitable.
   
   If you have backtested a strategy over years of data and there is no profitability to be found, then you should change your strategy or adapt it.
   
   It’s crucial here to be honest with yourself. Was there any bias in the backtest or did you automate and objectively look at the data? Human bias and error is incredibly important to consider here.

When To Keep Your Existing Trading Strategy

 Many traders are quick to abandon a trading strategy when it has a bad day, bad week, bad month, or even bad quarter but this is likely the wrong decision, if the past data is positive. You should only be abandoning and tweaking a trading strategy if you’re trading it perfectly, automated, or manually and the results are vastly different from the backtest data. For example, if over 5 years of backtest data your strategy has only had 1 losing month (which is unlikely), if you had 3-4 losing months in a row on live data – something is wrong and needs addressing.

However, if over a 5 year backtest you have 60% profitable months (much more realistic), having 3-4 losing months in a row on live data may be no problem at all. It’s likely that the strategy would soon be profitable again and claw you out of your drawdown.

Sadly, there is no ‘one shoe fits all’ approach to deciding whether you need to abandon or keep a trading strategy. Largely speaking, if it’s in line with backtest results, you should keep your existing strategy.

Also, if your strategy is profitable, you should just continue with the strategy. Do not seek higher levels of profitability by tweaking the system over and over again, often this does not yield great results as you’re actually just curve fitting the past data. Live data is much more valuable – if it’s working, don’t change it!

How To Find New Trading Strategies

Due to the rise of traders and trading content on social media, there are so many new strategies being published each and every week. This makes it easier than ever to find good strategies to test and deploy in the markets.

Typically, you can find strategies now through 3 methods.

1. Social media
2. Documentation from large funds
3. Testing yourself.

So firstly, social media… On social media, you’ll be able to find hundreds of strategies overnight. This can be great for ideation and some of the strategies being shown will be profitable if tweaked and tested! However, many strategies will also be completely unprofitable so you must do your due diligence, testing and approach this with caution.

Secondly, there are many books and documents online being shared by funds and research firms, showcasing various edges within the financial markets. Most of these strategies can be simplified for retail investors and tested thoroughly. Some of the best edges we have seen over the last few years have come from this approach – all of which can be gathered from Google!

Thirdly, you can find new strategies through trial and error and spending thousands of hours looking at the charts. This approach can be much slower and require a skillset that takes years to build but if you’re experienced – this can be a great approach to create original strategies.

How To Test New Trading Strategies

New strategies can be tested in a variety of ways…

1. Backtest

   The first way to test is to backtest. This involves trading the strategy on historical data. This means you can get years of data and thousands of trades taken in just hours. The benefit here is that this process can also be automated using some of the tools in the market right now.

   It’s important to try to remain objective and rule based during a backtest. If you let human bias and error creep in, you can get amazing backtest results without ever having a profitable strategy in the live markets – a mistake most beginners make.

2. Live Test

   The second step is to do a live test in the markets. This involves depositing a small amount of funds into an account and trading the setups live in real market conditions. This should be done for 4-6 months minimum, to verify that the strategy is profitable in real time, not just hindsight.

   Journal all of your trades and record the results during this process. If all is well, then apply for prop firm funding and scale your profits!

In Conclusion – Do You Need a New Trading Strategy In 2024

In summary, it’s very possible that you do need a new trading strategy but it’s also very likely that you don’t need a new strategy at all!

If you do need a new trading strategy, you can find some great strategies online by looking at strategies from research firms and funds, for you to then test yourself in the markets.

Are you looking to become a funded trader? Work with Lux Trading Firm now!