170: How to detect when a trading strategy is failing – Kevin Davey
Ever had a strategy that looked like it was broken and wondered if you should stop trading it or not?
Strategy failure (or periods of poor performance) are just a part of trading, but how you deal with it can have a HA-YUGE impact on your overall results… so how do you detect when a strategy is failing?
How do you work out if you should stop trading it or just give it some more time?
In this episode of BST Live, trading champion Kevin Davey joins us to discuss how to detect when a strategy is failing, including:
• Why looking at a single equity curve is not giving you the full picture,
• How to determine the potential ranges of future strategy performance,
• Using Statistical Process Control to monitor trading strategies and which metrics are best,
• How Probability Cones can give traders a more informed view of strategy performance (and when a strategy could be broken),
• What do to when a strategy over-performs (the answer may not be what you think!),
• Should you turn a strategy back on if it recovers after extremely poor performance,
• How a really good backtest can actually be a predictor of bad performance,
• Plus, much more!