What To Do When a Strategy Stops Working

Recently in our live trading room, I talked about the concept called “The Dip.” When we start out on a new venture, we’re optimistic about how this will change our life going forward, so we put all of ourselves into this new gig. 
 
And that lasts as long as we’re making progress. 
 
The very first moment that we encounter opposition, which in trading could be your first loss on a new strategy…we tend to get discouraged as it triggers off a lifetime of memories where we encountered similar disappointments. The brain says, “Oh no, here we go again.” This is “The Dip.” 
 
As a result, we quit and go back on the hunt for the next “new thing.” And the cycle continues, ultimately leading to future disappointment down the road when THAT new thing fails as well. 
 
Aren’t you tired of it? 
 
If so, perhaps the solution is to stop looking for the shortcut. You actually want the LONGcut. The DIP is where you will forge ahead through your persistence as you begin to learn how to tame a strategy, and come out on the other side far better than if you had quit like everyone else. 
 
So when a strategy stops working, ask yourself “why?” Exactly WHAT changed to prevent the strategy from continuing to work? What changes in price, time decay, or volatility have you observed that would change how the strategy works? 
 
Digging your heels in and finding out the real answers is absolutely the key to you eventually attaining your goal, because then you can fight back with adjustments. You know, there is a reason why a steering wheel was inserted into your car’s dashboard; life was meant to be lived through adjustments and adapting to changing circumstances. The Marines have an expression: “improvise, adapt, and overcome” and this is precisely what we need to do. 
 
Hit a brick wall? Strategy stopped working? Start to dig and find the REAL answers. You’ll look back on that moment years later and realize that it was precisely THEN that your trading began to take a turn for the better.

In your corner……..Doc Severson

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