Why Do it?
This is probably going to be a fairly small post, and perhaps a little stream of consciousness, but we'll see where we end up.
Like most traders, I realise the importance of doing backtesting and right now I'm investigating a swing trading strategy. The backtesting process is pretty labourious, but its better to test to a strategy on paper or in a spreadsheet or via real money. The why is really so that you can test something and see if it works.
At this point I've backtested 5 trades and so far its not looking like a good system, but we'll see where we get to.
How to do it?
For me, I back test in a spreadsheet, I've build a pretty good one now, which does a lot of the calculations for me.
I then set up an appropriate chart in trading view and go from there, using the replay setting to see how the system goes.
My current chart looks something like this one, its pretty basic but it does the job.
In terms of iterations, whilst right now I'm a little disappointed with the systems performance, I'll give it a few more trades before I rule it out. Thus far the system is only showing a 3% drawdown, so thats too early to rule it off, I may have just picked a really crappy time period.
Stay tuned for the outcome.
Nick the Trader Guy
Trading - when to sit out
As a trader, making the right decisions at the right time is fundamental for our success. There are times where the best decision can be to sit out of the market and not take any trades. To me, right now is one of those times. I base this decision on the fact that we are in the midst of earning season and the market seems to be actively ignoring central bank policy, in short, it seems to be fighting the Fed.