Trading multiple strategies can make for a robust approach if each individual strategy/system supports its partners in the stable…
Complementary Forex Systems: Align Your Strategies
Combine your forex strategies into a whole where one balances the other and a common vein running through each is identified and aligned
All traders should really attempt to to find (and refine and continually adapt) the one approach to trading that “fits them like skin!” This means that you should find an approach to trading the forex market that allows you to go about your life in a relaxed fashion, as unaware of the ups and downs of trading as you are of the very skin you walk about in.
I guess it’s a roundabout way of saying you need to be perfectly at home with, and comfortable in your chosen approach to trading.
This doesn’t mean to say that you should always trade only the one single strategy, or even system.
Many styles of trading such as automated trading, where the trader relies on a forex robot to do the trading for them, naturally lend themselves to using several strategies combined, in this case several forex robots.
The reason for this is to build robustness into your trading approach/system. Mixing a couple of different strategies can give you a system that adapts to the fluctuations and changes in the market place. In this way you are compensated for periods of bad performance from one strategy with periods of good performance from another, for example.
This brings us to the observation that there are two types of complementary system, and one is definitely better than the other.
The first complementary system combines one or more strategies that behave in different ways in reaction to the same set of marketplace circumstances.
Complementary Forex Systems: combining elements into a cohesive whole
The classic elements of earth, air, fire and water forming a unified world: an analogy for combining individual strategies into complementary forex systems
The second complementary system combines one or more strategies that behave in different ways at all times, they retain their different trading styles no matter what the prevailing conditions are.
An example of the first type of complementary system would be one strategy buying in reaction to a certain set of circumstances and another selling in reaction to those same circumstances.
So we might have a forex robot that buys when a currency breaks out to the upside, and another forex robot that sells when that currency breaks out to the upside.
You can see the problem with this approach: you are likely to lose on one strategy and win on the other almost all the time, resulting in a complementary system that at best breaks even, and most likely loses.
An example of the second type of complementary forex systems is where you are running two strategies simultaneously, one a scalping strategy and the other a swing trading strategy.
In this situation, any given set of market triggers is unlikely to cause both strategies to react in opposite ways at the same time. For example, if price reaches a double top the swing trading strategy may enter a sell order, and the scalping strategy may enter many small sell orders as price begins to fall away from the double top.
If you have found a single strategy that suits you perfectly then the above discussion may not be all that relevant. If however you are tempted to trade one or more strategies at the same time, bear in mind this subtle difference, as it enables you to build a complementary system that works, as opposed to one that goes nowhere or even worse, loses.
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