The Perfect Forex Trading Strategy!

I have found the perfect forex trading strategy! Well at least looks that way. However, I know all good thing must come to an end. And I know this strategy will not continue to churn away profits forever. I know better, really! However let's look at what I think is a perfect strategy.

There are a few things that must exist to be the perfect trading strategy, at least according to my little world. When I say perfect I am not talking about hitting 100% or 99%. The following is what I'm talking about:

1) The perfect strategy would be profitable. Obvious, not at all. My guess is that most amateurs have traded profitable strategies that would have made them a lot of money. However, most traders can not identify a profitable strategy if they were handed one on a silver platter. For example, if you offered a trader a strategy where he got paid $1.10 for every time a coin landed on heads and he had to give away $1.00 for every tails. My guess is that this exact scenario extracted to the Forex world would result in a losing strategy for the trader.

This is what would happen. The trader would trade along for a day, two, three or 30 and then come across a losing streak. The streak would be 4, 5, 6, 7 losing trades in a row and they they would quit. If you know anything about statistics, you know that 4, 5, 6, 7... losing trades in a row will happen. A long losing streak is a statistical fact if you do this game long enough. So you better know a losing streak is coming and be prepared to handle the draw down. However, if you know you have a profitable strategy, you learn to embrace those long draw downs because you know what is around the corner. Sadly this is one of the most important components that I have missed. I would venture to guess that 98% of all amateur traders miss this one too.

2) Strategy must have enough trades every month to have the results end up with statistical significance. What I mean, is if you have a strategy that trades only a few times a month you will not be able to tell if your strategy is worth trading until you have about a year of trading results. For me, I'm impatient and don't like to wait a year for anything. For me a perfect strategy would be to trade between 20 - 100 times a month.

3) The perfect strategy would enter trades on facts. For example, when certain criteria align, you would enter a trade. You simply would enter a trade, no fuss no muss. No emotion, none!

4) The perfect strategy would enter trades, exit trades at predefined limits. Yes, I mean limits and most importantly STOPS.

5) The perfect strategy would run while you are out on the golf course or climbing a mountain or whatever floats your boat.


Well I have a strategy with all the above criteria. Strategy is set once a day, has had over 150 trades since Jan 1, 2008. This equates to 2.5 months. It has a 52.67% win rate and it wins more than it loses. There is absolutely no emotion involved. 99.9% of the trades are done while I'm doing something else.

Since I have what I define as a perfect strategy, you ask why do my monthly results not show spectacular returns. Let me answer that for you. First and foremost, I'm trading this strategy with 1 mini lot. I'm trading with a mini lot because I need a little more time to confirm this is truly a positive expectation of a trading strategy. At which point I deem it to be worthy, I will slowly increase my trading size. Secondly, the reason my monthly trading results have not shown spectacular results is because I'm trying not to put all my eggs in one basket. I know sometimes things can seem too good to be true. As a result, I'm continuing to trade this strategy and develop other strategies. These other strategies have not been entirely smooth sailing.

I do have some of the most encouraging results I have ever seen trading. I'm not talking about my numeric hard monthly results, that will come with time. I'm talking about the fact that I know exactly why this one strategy is so successful and confirms everything I have learned. It is not pie in the sky thinking and hoping it continues to work. I know this exact strategy can be translated to other strategies. Only time will tell if it is the real deal. If it is the 'key', I can't believe how easy it is. This is what gives me scepticism.