Should You Abandon Your Broken System or Try to Fix It?
One of the toughest situations you can face as a binary options trader is one where your trading system or method is not working properly. Maybe you have been using the method successfully for some time now, and only recently it has started to malfunction. It no longer delivers the excellent results you have come to expect. Or perhaps you have no working method, and are simply working very hard to try and generate great results during testing so that you can go live. But no matter what you do, the method simply will not perform as you need it to. In either situation, the prime question is this: Do you keep working on the system, or do you abandon it and move on?
Unfortunately this is a challenging question to answer, and there is often no definite “right” or “wrong” choice. It can be hard to make a determination because you cannot see clearly what is going on, which is part of the problem in the first place. As a result, there are no black and white answers. What you can do is try to figure out whether you are making a poor investment of your time if you continue on, or whether you would actually be wasting more time and effort moving on to a new system. Here are some questions you could ask yourself:
1. Is my system really broken?
If you are losing trade after trade, the answer may be an obvious and resounding “yes,” but this bears asking if you have only lost a few trades. If you are panic-prone, you may make more out of a few small losses than you should. Look at your testing results (if applicable). What was your longest losing streak? Are your losses within those expected bounds? If so, keep trading using your current system. Your situation may right itself. Changing things may only create a problem where none exists.
2. Can I figure out why I am losing money? Is it something I am doing?
Quite often, we form bad habits without even noticing them. It may be that your system rules are just fine, but you are doing something wrong when you try to apply them (often trading in the wrong context, for example). If it is something you are doing, try correcting it without altering your system rules. You may very well find that the problem is fixed.
3. Can an adjustment save my system?
A lot of trading methods work great for years or even decades, but very few will survive all that time without some adjustments now and again. You should actually expect to have to make occasional changes as the markets change. If your system is no longer performing as expected, this is not a cause to panic. Stop live trading and go back to demo testing. Try making some adjustments to see if you can get your results back to what you expect. Ask for help on forums. Someone else may be trying to tackle the same issue, or may have already succeeded.
This may also be applicable with a new system you are testing. If you have not gotten the results you are looking for, it could be because the system needs to be tweaked for your particular personality or use. You might also try tweaking the way you use the system. The same system that is not working for one expiry period may work great for a different timeframe, and so on.
4. Is the system a good or bad fit for me?
Quite often, when a system really is not working out—even if it works for someone else—it is because it is not a good fit. It may just not work out well for your personality. If you do better with trend trading, why use a system designed for ranging markets? If you are great at short-term trades, why use a system for long-term trades? If you find price action intuitive, why study fundamental analysis? Do not keep plugging away at something just because someone else says it works for them. You are not someone else!
Try to Avoid Starting Over
As a general rule, you should always ask yourself whether you can salvage a system before you throw it away and go back to square one. This does not mean there are not situations where you shouldn’t do just that—sometimes a system really is not right for you, or really is not a good system. There are after all thousands of methods out there, and not all of them are equally useful, and not all of them fit with all personalities and trading schedules.
Test your system out here before you throw it away!
Many systems however are salvageable. If you are starting out testing and your results are pretty good but not as good as you want them to be, you are more likely to reach your goal by continuing to improve something that already works than you are by going on a wild goose chase. And if you have a system which worked great in the past but which lately has not been performing as well, you are much more likely to succeed in fixing it and getting back on track than you are in finding another great system and learning it in a timely fashion.
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