Do Trading Strategies Stop Working
Recently I seem to be getting the same question often, and while I have heard it previously from time to time over the years, it seems the question is coming more often in recent weeks. I am not sure why, but I can only assume that it must be a hot topic on some forum or chat room that is dedicated to day trading strategies. The question I’m getting revolves around some amount of concern that by sharing my trading strategies with too many people, that eventually price action trading will stop working or become less effective. While the question comes in different forms, it’s basically people or traders asking: Do day trading strategies stop working over time or if too many people are aware of them or know about them?
While there are multiple reasons that this is a completely unfounded concern, the very fact that the markets are so large and so efficient makes it almost impossible that even a large percentage of traders would ever use the very same strategy. While price action works in any market and on any time frame, we like concentrating on a single market and becoming an expert in that market, so we mostly only trade the ES or mini S&P futures these days. The very reasons that we like trading the ES is why there is zero concern that our strategy will ever stop working any longer. The ES is the market of choice for many professional retail traders as well as commercial funds, simply because of the volume and the fact that it’s somewhat predictable. One thing is certain about trading the ES, and that is the fact that you can increase your leverage without having to worry about slippage due to the fact that there is so much volume. Even if you don’t like the ES, there are many other markets that you can trade that are just as good for day traders, and if you prefer, you can even day trade individual stocks.
However, let’s assume that everyone trades the ES and that there are no other markets to trade, there is still no reason to have concern about over saturation of our price action trading strategies. Price action is different than most strategies in that you are taking trades based on what prices are actually telling you, rather than having some set strategy that says you go long if you see this, or short if you see that. Price charts speak a language, and if you can learn to speak that language, you will have a distinct advantage over 90% of all other traders. It’s not easy to learn price action and it does take a lot of time and hard work, but once you learn it, you will have a skill that will last a life time and that you can use to trade any liquid market anywhere in the world. There are so many price action set ups each day throughout all of the different markets that there is no way everyone will trade the same set ups, even if they all traded with our exact same strategy.
Because learning to trade is so difficult, many trader have this misconception that there is some secret to making money in the markets, and that only a few select traders know these secrets. Many also believe that the markets are rigged, and only a select group of traders know this for certain and can profit from it. While I don’t believe that the markets are rigged, I do know for a fact that it wouldn’t matter if they were if you learn to trade with price action as we teach it. Learning to trade profitably is not easy, and like any profession that pays well, you must pay your dues and put in your education time. Most inspiring traders don’t understand this, and read a book or take a course and then think they are going to step into the trading world and beat highly experienced and trained traders that understand the language of the charts. It’s just not that easy, and most go broke before they even have the slightest understanding of the markets or a price chart.
You won’t hear this message in most places that are trying to offer you trading strategies. You also won’t find this information on most forums or chat rooms, even those dedicated to traders. The message is this: Learning to day trade takes a lot of time and hard work, and you must study and practice trading on the simulator for many months and maybe even many years before you will have success. Not only do you need a good strategy, but you must also learn to control your emotions as well. I could actually give away my strategy for free all day long, and the majority of traders would never profit from it or even think it works, because they won’t be able to stick with it long enough to actually learn it. Even once they learn the strategy, they then have to conquer the mental aspect, which is just as important as having a good strategy. Fear and greed will gnaw at you consistently when day trading, so you must learn to over come those mental issues, and that too takes time and experience, which can only be gained on a good simulator using live data for some extended period of time.
Unless you have 100’s of thousands of dollars that you can waste, you will likely go broke trying to learn with real money in a live trading account, so never attempt it. Prove you can make money and learn to read a price chart first on the simulator. When you can double or triple a small account on the simulator, then maybe you are ready to try and go live, but even then, you will need to start small and learn to hit a small daily goal for some period of time. Once you can consistently hit that small goal, you can increase it slightly and begin again. You can not increase your goal too quickly, but only increase it slowly over time after proving you can meet each new goal for a few months at minimum. The mental pressure increases exponentially as your leverage increases, so make sure you understand that this is why you increase slowly. While this entire learning and growing process will take time, the benefits and pay offs will be astronomical and well worth it in the end. Look at it as you would any necessary education or extended training program that offers very high stipends once completed.
So, do trading strategies stop working over time or if too many people start using them! No, they do not, and it’s a concern that you should stop fretting about if it’s been bothering you. As we already discussed, price action works in any market and any time frame, and it’s universal anywhere in the world. In fact, I believe that anyone that is making money as a day trader actually understands how to read a price chart and use price action to profit from the markets, even if they do not call it price action trading. If you are interested in learning how to day trade with price action, you can find more information about how we do it at http://priceactiontradingsystem.com/pats-price-action-trading-manual.