Weekly review, and here it is: another week painted in furious red numbers. I balance my trades and it’s all red! Six consecutive trades in losses and not a single winner. What a disaster, surely my strategies have expired. The market has changed! This way we will never get out of this Drawdown…

It’s not the robots, it’s psychology

It is unanimous opinion that psychology is one of the most influential elements of success in trading. I have even seen courses where at the beginning of the course an entire subject is dedicated to having a good mental focus, and at the end of each subject they recommend breathing exercises. With the same joy that psychologists recommend you to listen to relaxing music with chakra energies; whatever that means.

If everybody thinks the same, then I must be completely wrong. So at the end of the Analysis, my bad karma is to blame. This is it.

End of story!

Although… I couldn’t care less about psychology, relaxing music makes me very nervous, and I’m not much into trading courses. Better focus on reviewing my robots.

Backtest. My Personal Religion

If I have to identify myself with a religion, I confess myself a follower of the Backtest.

What happened so that this week my 6 trades were losers? Has the market changed again? Did my robots break? As always, the answer to this and almost any other question can be found in the Backtest.

Let’s get down to business. We run a new Backtest and, surprise surprise, everything is in order. With some small differences, but nothing out of the ordinary. So, everything normal?

The Basics

All my robots have one thing in common. They reproduce trending strategies. I could elaborate much more on this concept, but this is the pure foundation: Trending strategies.

Consequently, if the market is not in a trending phase, it would be reasonable to expect that any trending strategy to generate bad results. In fact, it is very obvious statement that explains why my bet on Gold went wrong.

It wasn’t until early 2024 that my Gold robots started working.

But back to the question: Why has this week been a loser without even one winning trade?

The Market. Always the Market

We could already imagine that the market has been totally choppy without defining a trend. Let’s see it in a graph:

Maybe it’s not clear. The graph is one of the Forex pairs I trade the most, irrelevant which one. But it doesn’t hurt to notice that the week practically ends with the same price it starts.

• The dotted lines show my real trades. All losers and 1 breakeven.
• I’ve added a stochastic indicator. I don’t care about the parameters, I’ve left the default ones offered by Metatrader.
• The yellow lines are the trades proposed by the Stochastic. 100% correct!

I don’t use the Stochastic in any of my robots, not even as a filter. But it’s the oscillator par excellence.

In such a choppy environment as the one in the above graph, where the Stochastic maintains a 100% hit rate. It’s impossible to expect profit from trending strategies. In conclusion: Yes, we’ve had a streak of consecutive losing trades. A bad week. But my robots have performed as expected.