Hi all. Over the years, I have backed tested many trading ideas searching for any kind of edge or historically repeating patterns that might potentially be useful at improving my trading. Most of the back test results didn't indicate any kind of trade-able edge, however some have been pretty useful at helping me understand the dynamics of the market. This journal will be used to post back test results, which will include the good the bad and the ugly. I'll also share my thoughts on other aspects of trading like money management, but it will mostly be about the back testing. My writing skills are not very good, so you will have to look past my poor grammar and so forth. Speaking of money management, it may be the most import aspect of trading, so I'll start off by sharing a few thoughts on it. The basic concept is to make the most of what you got by using proper leverage and risk as it relates to your trading method and account size. Seems simple enough, however normal draw downs are longer and deeper than most traders are prepared for emotionally and financially. It is very important to have a realistic expectations of losses and to manage trade size accordingly to avoid blowing out. I'll be posting some data results that are related to money management in the future.
I back test by running my automated trading system in similation mode using data I have collected over the years. I'm a day trader, so most of the tess I run use 1 minute data.