Topic: "Flat" stagnation

Stagnation in a strategy is not a bad thing as long as the balance / equity curve, under the stagnation period, is relatively flat.  Flat stagnation, tells us that the strategy avoided opening of new positions (for example because behavior of a currency pair has changed under this period).

Of course we are always looking for a strategy with only short stagnation periods, to maximize our profit rising, but the conclusion from this observation (about stagnation periods) should be that in our search we should not discard strategies with relatively flat stagnation periods. Currency pairs will constantly change their behavior and, in some way, flat stagnation tells us that the strategy works well, “understanding” that it should not enter the market when a pair “misbehaves”.

When posting here on the forum I will often write something with a goal of checking if my reasoning is correct. So it is often more a sort of question, rather than a statement. To stress that it is so, I often should want to end my text with “Am I Right Or Not”. Acronym for this could be “AIRON”. I think it could be useful shorthand to tell anyone, that the writer of the text is looking for confirmation. So let me end this text with AIRON. 

(I am not originally English speaking person, but I have a feeling that this acronym connects to “to iron something”, which, in a way, means an effort to make something more straightly, more obvious).

Re: "Flat" stagnation

Yeah, we should have a correlation between the pair and the strategy - if PA is flat, trading should be that as well. If there are moves, there need to be positions to profit from it, isn't it. Therefore stagnation should be evaluated in direct comparison with PA!

Great posts LH, thumbs up!

Re: "Flat" stagnation

Yup. Thumbs up for AIRON smile.

I'll add that it's a good idea to switch on the Long and the Short balance lines. They both should rise steadily. If they don't, it's a sign that the strategy may utilize either a good up trend or a down trend.

We see here Long, Short balance and the market price.

Re: "Flat" stagnation

Thank you for your insights, Footon. You have directed me towards an apparent fact (correlation between the pair and the strategy, which I didn’t think about before). Now I can add an extra evaluation level when checking my strategies. 

Also, Mr. Popov’s remark adds strength to my FSB muscles.