Saturday-Back Test for Confidence

BACKTEST, TEST and RETEST… new plans or improvements and variations of your trade plan.

Nobody would ever be steeewpid enough to trade a plan without testing it out would they?  Hey, get that mirror away form me!  Send that junkyard dog after me if I ever forget again.

In lieu of my Saturday review this week I am stressing the need for manually testing your trading strategy.  Nothing will give you more confidence than back testing your trading plan and seeing your trade plan prove itself out.  You need to go back candle by candle for the last year and check to see how your trade plan payed out with various stop scenarios and time frames over the past year.  If you are lucky you will prove to yourself you have a winning plan and all you have to do is implement it to be successful.  If there are problems, then those will show.  As a bonus you may determine a way to enhance your winning percentage.

I will be testing -Pass Through Stop Hunting Range Trading- because it is new to me.  If I have time I will be retesting my breakout trading strategy as well to see if there are any improvements I may have missed.

If you are trading a Plan make double damn sure you have personally back tested it yourself within the last year.

Conclusions….  My first recognition in this back testing session is seeing how much easier it is to trade off of the day charts than the usual small terms charts I have been focusing on.  Trading only breakouts or reversals on the big time charts will reduce trading activity and the time required to trade. Hey you can get your life back, and still be a forex trader. …more to come.

pass thru stop hunting backtest …for GBP/USD 5M CHART in  January showed a 83% success rate at at 12:30 AM PST with 25 pip profit taken at 00 and stop loss set at 35 pips. So far testing in February with 25 pip profit 25 stop loss we are getting 78% success at 12:30 PST.  This is a huge job backtesting the 5M time frame for this type of trade.  IS IT WORTH IT TO YOU TO BACKTEST THIS SYSTEM TO IMPROVE IT IF YOU CAN GET 80% Profits?  You will be a different trader when you posess a strong CLARITY about your trade plan execution results.  This is a CONFIDENCE GAME and this CONFIDENCE CLARITY will move you into the top 5%. There are many variables you can test, including trend, spike maximums, time of day, momentum, etc.  Take it from me, 1 month is just a start on backtesting.  Let me know of your backtesting results so we can compare. 

Here we again see the advantage of trading longer term trade plans from the daily charts.  Testing position plans is so much faster and easier.  Testing a position trade plan for a year is easier than testing this pass thru stop hunting trade plan for a month.