While backtesting your strategy is essential to good trading discipline and should be part of any forex trader’s routine, there are shortcomings and pitfalls that one should be aware of. The underlying theory – or purpose – of backtesting, is that backtesting forex strategies resources strategy that would have performed well in the past is likely to also do so in the future. Despite the above uncertainties, backtesting should certainly not be discarded.
This article seeks to give traders a good basic understand of what backtesting is, what drives the backtesting process and what one should be aware of in order to obtain reliable and usable backtesting results. Backtesting works by applying historical data to a given trading strategy and thereby reconstructing the trades that would have resulted from the given strategy during a specified time period. Based on an analysis of the resulting trades, key performance metrics about the overall performance of the strategy can be estimated. What results can I expect when running a backtest? Each metric gives you valuable insight as to how your strategy is likely to perform. Please see the illustration below for an example of the statistical ratios you can expect when backtesting with Tradeworks.
What settings should I have when initiating a backtest? Depending on which backtesting engine you use, the settings may allow for a certain degree of customization including initial equity, date-range, commission level, periodicity, default lot size etc. At Tradeworks, we prefer to keep things simple. What factors are likely to influence the outcome from my Backtesting? You might find that a given trading strategy will yield different results depending on which backtester is used.
Other Factors affecting the outcome from Backtesting include slippage, latency, rejections and re-quotes. Backtesting is one of the most important disciplines when automating forex trading strategies. When executed correctly, with a high-quality set of data, backtesting is a hugely valuable resource that allows traders to test and optimize trading strategies and thereby gain the necessary confidence prior to running them in a live environment. Tradeworks is a broker-neutral developer of trade automation software working solely for individual traders.
There are potential risks relating to investing and trading. You must be aware of such risks and familiarize yourself in regard to such risks and seek independent advice relating thereto. Disana kelihatan mana yang profit dan loss. 1 bulan ada 20 hari jadi ada beberapa hari yang loss.