When things are going smoothly with algorithmic forex trading, you may feel like trading is effortless. You watch the wins roll in automatically, day after day, week after week.
But then one day, something goes wrong. Your algorithm begins to under-perform. You might not even notice it right away. But after a while, as you watch your stats keep dropping, it becomes undeniable. Your algorithm no longer can keep you profitable. What can you do? This guide goes over the steps to get back on track.
Immediately stop trading live with that algorithm.
The first thing to do is to turn off the automatic trading using the algorithm in your live trading account. That way, you will stop losing real money with this algorithm. There is no reason this situation needs to bleed you dry.
If the algorithm is yours, begin the troubleshooting process.
If you created this algorithm, and have the ability to edit it, that’s great. It means you have the power to do something about the problem directly.
It is time to start analyzing what is causing your algorithm to stop producing the expected results. Here are some things to look at:
• Whether market conditions have changed.
• Whether adjusting certain parameters would make the algorithm profitable again.
• Whether there have been issues involving execution.
Sometimes you’ll find that your method has to be adjusted to work in a new market regime. Or perhaps you need to stop it from firing off trades in certain contexts. There are a lot of possibilities for what could be causing the losses, thus the exact steps needed to fix the problem can range quite a bit.
Test out improvements to your algorithm.
If you think you have identified and remedied the problem, you should try trading with the algorithm again. But make sure you do this step in demo mode so you are not putting real money on the line.
If your algorithm begins to perform as expected again, return to live trading with it.
If all goes well with your test, you may be able to return to trading with the algorithm in your live account. Consider staking a lower amount than you usually do just to be on the cautious side for a while. Then increase it once you are sure things are back to working as they should.
If the algorithm still doesn’t produce profitable results in demo, you will need to go back to troubleshooting. Rinse and repeat until you are finally able to go live again. Do not be afraid to ask for help from other traders.
If the algorithm is not yours, wait and see if it will be fixed.
What do you do if the algorithm that stopped working is not yours? If that is the scenario, then there is not a whole lot you can do. You have no way to troubleshoot it or alter it on your own, so you are pretty much stuck waiting for the person who developed it to fix it.
Consider contacting the provider.
One would hope that the developer of a trading algorithm is aware if their algorithm is not performing anymore. But this may not always be the case. The developer may have many algorithms to keep track of, or other projects, or they may just not be overly involved with forex at the moment.
You could try reaching out to them if their contact info is available. Be polite. Do not blame them or yell at them. Just tell them that it is not working the way it used to, and ask them to please look into it if they have the time. There is a chance they will appreciate the notification, and get to work on the issue.
If the algorithm is (supposedly) fixed, test it in demo mode.
Eventually, the developer of the algorithm may notify users that they have corrected the problem with an update. When that happens, you can try getting the new version of the algorithm, and testing it out again.
Always do this in demo mode. Hopefully, performance is back to what it used to be (or better). But there is no reason to risk real money until you have verified for yourself that this is the case.
When performance issues persist, check first to make sure it isn’t a problem on your end (i.e. slow execution by the broker, or a money management strategy that isn’t suited to the algorithm).
If you do verify there are still performance problems specifically with the algorithm, you can contact the creator again to report them.
If you confirm the algorithm works again, resume live trading.
You can switch to trading live with real money after you verify the algorithm works again in demo mode. Think about starting out risking a lower amount than you usually do, just to be on the safe side. Raise it again once you feel confident.
If the algorithm is not fixed, search for replacements.
If you are tired of waiting for the developer to fix the algorithm, you can look for a new one to use in its place.
There are tons of free and paid options out there. So, you should be able to find something that will work for you.
If this was your only algorithm, you may want to diversify going forwards. That way in the future the next time an algorithm stops performing as expected, you can at least keep relying on the others while you troubleshoot or replace the underperforming algorithm.
Algorithm Performance Declining is Frustrating, But There are Solutions
It can feel daunting when the trading algorithm you rely on stops performing the way you need. But that does not mean you are helpless. You either need to troubleshoot the algorithm, or replace it with a new one. The sooner you get to work on one of these solutions, the sooner you can get back to low-effort, algorithmic forex trading.
