Thread: Make your backtesting more interesting

After having done thousands of backtests and thinking i knew everything about it,
i find that there is yet another neat feature about the function that will make
life and testing much easier: the Visual mode feature, but made to go much FASTER than
you may have put-up with previously. i had been leaving it set for whatever the default was
(scroll bar, pause button (which, once you click THAT upon starting the test, you can
add indicators and make adjustments above, and then click on the forward >>> arrows to continue)
and 'Skip to' which i have not yet tried to mess with, but today i slid the slider all the way to the
right and the tester goes blazingly fast within the last two increments of the scroll bar's range.
it can be adjusted also with your right and left arrows on your keyboard and
i just felt i should tell you all the good news, whether it is well-known or not, common knowledge
or my stumbling upon it. have a good day----newboy

Always make sure that you use forex backtesting charts to keep your current winning trades running. This data can also be used to predict which losing trades must be cut off immediately to minimize losses. At the end of your trading day, you should have more winning trades from losing ones. Otherwise, you should have kept your winning trades running while your losing trades cut off right away. This means even if there are more losing trades in a day, cutting them off while keeping your winning trades running will ensure that you have profits for that day and not losses.

Review all portfolio assumptions prior to launching a portfolio test. These assumptions include money management strategies with their parameters, a ranking strategy with its parameters, portfolio capital and constraints, commissions, slippage and statistics settings, bars referenced, base and portfolio currencies and the currency conversion method.

Back testing software is an integral cog in the process of analysing trading systems. Back testing is the process of testing a trading strategy using historical data rather than testing it in real time with real money. The metrics obtained from testing via back testing software can be used as an indication of how well the strategy would have performed had it been applied to past trades. Interpreting these results then provides the trader with sufficient metrics to assess the potential of the trading system.

There are many historical forex trading data providers. However, you must research about each provider before purchasing the data.

Reputable historical forex trading data providers must be able to give complete data for a year. This is because studying complete historical data will be more helpful than second guessing trades in areas missing from historical data charts.

You must also know the different signals and time frame charts used in these forex backtesting data. This will help you completely understand how trades in covered days went through.

Back testing and auto trading are two important components of implementing trading strategies that generally do not rely upon the trader’s judgments or discretion. These types of strategies are primarily technical in nature, and they must necessarily have rules and criteria that are unambiguous.
Back testing allows the trader to determine if a given strategy would have been profitable using past price data, which is an indication of how it might potentially perform in the future. In contrast, auto trading actually executes real trades automatically according to a pre – programmed set of instructions that sets trade entries, stop losses, and profit limits.

Backtesting requires the use of historic data to test the results of each element of a trading strategy. Simply put, the more extensive the amount of data available, the higher the quality of the result. An ideal trading system will recognize changes in trends -- bull, bear and neutral, sideways action, but also be robust. Robustness is the ability to allow periods of randomness that do contradict the trend initiated through the buy signal up to a certain point. The difference between randomness and the the end of the trend is the found through backtesting. This is a very important factor because it suggests that intermediate and longer term trends are more profitable trading patterns.

The process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness.
The solution is to test the model by using it on only the data available at some past date, and then comparing the predictions to what happened subsequently. This is back testing.