A world trading champion explains his edge: his strategy works brilliantly in trending markets but fails in choppy ones. When market conditions shift, so do his results. Understanding when your strategy fits the market regime is what won him the championship.
The main reason why I won the World Trading Championship is this. So let's analyze this. We are in a trending market and we have a trending strategy. So if we take a trade here and we took target, and the next trade we take a trade and we took target, it's because the strategy likes the condition of the market. So a win in this case will make a win more likely. So it tells you something about the next trade. If we shift from a trending market that is the best condition for our strategy and we switch into a choppy market, we will tend to lose. So what What does it mean? When we trade, we have regimes. So if we lose and we lose again, we will be more likely to lose again because the strategy doesn't like that regime. This is called positive autocorrelation, and in my strategy, I have a positive autocorrelation.
