The risk of trading one profitable strategy


Greg Pawlak

2 min read

selective focus photography of graph
selective focus photography of graph

So why is it very risky?
The average trader tests strategies a year or two back, depending on the data they have, and installs them immediately on a real account after accepting the result without verification, even on a demo account.
Below is the USDCHF daily chart from November 2015.

Many new traders started their adventure with the market during the crisis in 2020. Basically, it was the time of the bear and sideways market. If a trader has used the last two years for a test, he does not know how his strategy will behave in a bull market. The last year is also a time of high volatility and a downward trend, and we do not know when the trend will reverse and what the volatility will be during this time.

So, will you be able to adapt to the new conditions as a discretionary trader?

Or when trading one auto strategy that loses profitability due to high volatility, can you afford to have your trading downtime while you develop a new strategy?

What will you do if regulations change in your country, and you won't be able to use this strategy?

And the worst that can happen, a sharp move with low liquidity like during the 2015 crisis.
Your one profitable strategy could have brought you a huge loss

If trading is your hobby, and you trade from time to time, one strategy is more than enough.

If you want to make money long-term, diversifying your risk across multiple strategies is essential

Profitable trading is boring, predictable and structured.