Back test your decision to use back testing

Most data that people use for backtesting is a representation of what has happened in the past. That representation is simplified to give a comprehension model that most people would understand. For example: Open, High, Low, Close on a chart. Maybe with volume, bid-ask, delta, and even fundamentals. Now all those data points are in no way all that happens during a trading session. Every tick recorded is just that, a recorded tick. It doesn't tell you 'why' it moved, 'how' it moved, and by 'who' it moved...

It is like learning to drive a car by looking at a recorded GPS tracking device. Now, if you know how to drive a car, a GPS is great. But no person will learn how to drive a car by just looking at all the different scenarios a GPS will get you to your destination. That is what backtesting is.

 

Good Morning danielc1.

If back testing a system or trading idea or trading method for edge or profitability does not make a trader a profitable trader, please explain what makes a trader a profitable trader?

Thank you.

 

Good Morning oraclewizard77,

This is a very good statement. I like Always in. I am Always in trader. I have no special setup or no edge or anything. I just do what makes sense in real time.

I actually agree with you this on statement. @MarkBrown suggest this to me as well.

I think searching for a setup(s) is overrated. I learn nothing doing this.

I learn and make the most money from Over Trading and Revenge Trading and doing it all day too.

 

Besides the mindset and knowing who you are and how you react in every circumstance?

A true belief in cutting losers and running winners and a real understanding of probabilities.

 

Hello danielc1,

Thank you

 

Are you saying you can find a random destination better without GPS than with?

 

Haha, no...
But what are you with the directions of a GPS to a random destination, if you do not know how to drive a car? People believe the directions (backtest result) of a GPS (backtesting software) will teach them to drive (trading) the car to that destination. That is how absurd backtesting is...

 

LOL GPS is not only BACKWARD looking.

 

Yeah, know that feeling... my GPS also tries to steer me onto roads that need to be built in the future.

 

%%
LOL;
old school paper maps can help, even though they time stamp those, good.
I look for patterns anywhere.
Average tractor trailer is 72'= + most drive much better than the pleasure drivers.
Except the union made mess =Yellow Freight trainwreck