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Coach's Playbook Posted by Team Topstep April 27, 2022

Adjusting Your Strategy

What do you do when your game plan just doesn’t seem to be working? How will you recognize that it’s time to make some changes? This week, the Topstep coaches are discussing the process of adjusting your trading strategy, including telltale signs that something about your approach to the market is broken and needs to be fixed, and also share some sound advice for identifying points of failure and learning from them. 

Adjusting Your Trading Strategy

It’s not always apparent that something is broken, but over time, your P&L will tell you a lot about how effective your trading strategy really is. So, here are a few ways to help you identify and diagnose a weakness in your system.

First, are you bringing consistency to the market every day? As Coach Hoag likes to say, if you want to find consistency in the markets, you have to bring consistency to the markets. Meaning, that there’s a chance it’s not the market state that is giving you the most trouble, but rather that you’re not sticking to your plan. So take a step back and try to determine whether or not you’re seriously putting in the time and effort to follow through on your game plan. 

Next, if you decide that you need to make some adjustments, start small. By making changes in small increments, or one at a time, you’ll have a better chance of identifying any specific single point of failure which you might have missed if you had made one large sweeping change. So, don’t completely give up on your strategy right away. Instead, you might find that you just need to plug a few holes.

You will also want to consider trading smaller sizes and scaling back on your risk exposure. The last thing you want to do is blow out of your account while you’re in the middle of adjusting your strategy. In fact, it’s not a bad idea to move to a simulator until you start seeing some improvements; the less risk you take on at times like this, the better.

Trade Well!