“Reshuffle” Forex Trading Strategy, Is It Need?
Lately, the issue of the reshuffle of the work cabinet of President Joko Widodo has spread. There are several ministerial names that are expected to be replaced by President Jokowi. Even though until the time this article was written, the Palace still denied the issue, but the news was increasingly heard.
It is too far if this article discusses political issues, even though one of the factors driving prices is also a political issue. This article will not discuss political issues, either.
Actually, this paper only wants to discuss whether a forex trader needs to evaluate his trading strategy , just as President Jokowi evaluates the performance of the ministers in his cabinet and is likely to do cabinet reshuffle ?
According to Wikipedia, cabinet reshuffle or cabinet reshuffle is an event where the head of government plays or changes the composition of ministers in his cabinet. Why does it need to be shifted or even replaced or removed? It could be because there are those who resign, or are considered incompetent to carry out their functions and duties.
Even though we know that the duties and functions of ministers are vital to assist the head of state in carrying out the state. The Cabinet is a “tool” to run the country well in order to achieve a country of peace, security,
Trading strategy = tools to achieve goals
If a president needs a solid cabinet to run the government well, then a trader needs a good trading strategy to achieve the final goal: consistent profit.
Well, it starts to look right, the relationship?
There is no perfect trading strategy, in the sense that there is no strategy that can work well in all market situations. There are times when a strategy cannot work well. For example, a trend -based strategy will not be able to generate profits as expected when the market is moving in sideways conditions. Conversely, the strategy for sideways markets also failed to be implemented when the market was trending.
So, there really is a time when a trading strategy cannot be implemented. Though strategy is one of the tools needed in trading and its role is very vital.
Then how do you work around this?
Because of the limited ability of a trading strategy that is not “resistant to all weather”, then you need to conduct periodic evaluations that are adjusted to the current market conditions.
If you find that the trading system cannot provide maximum results, or even produce a loss that is greater than the profit in a certain period of time (for example a month), that’s when evaluation needs to be done.Don’t wait until your money is drained to realize that something is wrong with the strategy you are running.
Likewise if it turns out that the profits you get exceed your expectations, it is also necessary to do an evaluation. With evaluation, you will know in what market situations – or in which currency pair – your strategy achieves its best performance.
Things go wrong? Reshuffle!
Return first to the evaluation.
It was mentioned that you must be able to recognize the symptoms that something is wrong with your forex trading strategy before the “something” is eating away at your capital until it runs out. One of the parameters – above has been delivered – is when the percentage of loss is greater than the percentage of profit.
Find out what is “wrong”. Have you really complied with the rules of the strategy? If so, then consider the market situation when the loss occurs.Is the strategy that you are running in accordance with the current market situation?
If the answer is “no” – for example the market is sideways while you apply the trend following strategy – then that’s when you reshuffle.Change strategy by implementing strategies for sideway markets. For that, of course you must have some kind of backup strategy, or – my term – backup plan.
As your experience and knowledge develops, there is a possibility that there are several strategic parameters that need to be replaced. For example, if you find that there are indicators that are more suitable for your trading style, then there is no harm in you replacing the old indicator with the new one. Of course before doing that, you must really learn the new indicators well, in the sense that you have recognized their strengths and weaknesses. A kind of fit and proper test .
Well, even though forex trading has a considerable distance to get in touch with politics, the cabinet reshuffle step turns out to be similar to what traders do.
So, don’t be afraid to reshuffle your trading strategy. No political force can hinder your “prerogative”. Especially if it’s just a forex broker .