Backtesting guide: Iterative steps. Gap fills example.
1- Notice something, or read about it (patterns, rsi), and just go look.
Lazy people will lose their money to those that put the hours in. Some efforts are actually required at some point.
No avoiding the grind. No "assisted comfort" instant gratification in real life.
2- Starting backtesting. One has to actually know what works and how it works
3- Stick to it don't deviate or head goes boom
Looks good, we are looking at both then
* Oil was not as good technically
Checking some GBP gaps in 2018. It could depend on the year, type of market, etc. Backtesting a different ticker it's fine have first step is just to gather info.
Ok that's enough. You would need to go throught in my opinion at least a good 50 examples, we did 20 here, and then you would start deciding on some possible direction you want to go to (where to enter, set SL, what TGT), then go onto the next step, excel.
4- Set some at least vague rules and put these numbers in excel
"With a RR of 1 tgt from open to close(-1)" => x% winrate
"Opposite direction entering at close-1 with SL the gap*2 and tgt 2:1 (just making it up here)" => y% wr
Is there to start with a profit factor of at least above C (maybe 1.2? your call)?
Other stats: how far does it go against/with, then through more analysis "what was the trend", "did it fill half before filling me", etc think outside the box.
etc....
5- Improve/more backtest
As you take trades or just keep backtesting you try to tweak it to get more out of it.
As they say "do not try to make it too perfect". Overoptimising = cheating = losing.
6- Practice
You have to actually participate in the market for real at some point and live through it all.
Don't forget to log everything, and review your past operations.
7- Realize you're just accumulating knowledge and you are going to go discretionary anyway and then it's all about your own skill
So get good.
Lazy people will lose their money to those that put the hours in. Some efforts are actually required at some point.
No avoiding the grind. No "assisted comfort" instant gratification in real life.
2- Starting backtesting. One has to actually know what works and how it works
3- Stick to it don't deviate or head goes boom
Looks good, we are looking at both then
* Oil was not as good technically
Checking some GBP gaps in 2018. It could depend on the year, type of market, etc. Backtesting a different ticker it's fine have first step is just to gather info.
Ok that's enough. You would need to go throught in my opinion at least a good 50 examples, we did 20 here, and then you would start deciding on some possible direction you want to go to (where to enter, set SL, what TGT), then go onto the next step, excel.
4- Set some at least vague rules and put these numbers in excel
"With a RR of 1 tgt from open to close(-1)" => x% winrate
"Opposite direction entering at close-1 with SL the gap*2 and tgt 2:1 (just making it up here)" => y% wr
Is there to start with a profit factor of at least above C (maybe 1.2? your call)?
Other stats: how far does it go against/with, then through more analysis "what was the trend", "did it fill half before filling me", etc think outside the box.
etc....
5- Improve/more backtest
As you take trades or just keep backtesting you try to tweak it to get more out of it.
As they say "do not try to make it too perfect". Overoptimising = cheating = losing.
6- Practice
You have to actually participate in the market for real at some point and live through it all.
Don't forget to log everything, and review your past operations.
7- Realize you're just accumulating knowledge and you are going to go discretionary anyway and then it's all about your own skill
So get good.