You have it all wrong. Backtesting does not produce any results about the future. It is a process of falsifying hypotheses about the past. Its value lies exactly in this. Any hypothesis that failed in the past, in the absence of direct competetion, has a probability near 1.0 to fail in the future. Thus, backtesting is a filtering process. It is not a means of proving hypotheses, like you and other newbies think. As a matter of fact, it is known to all but cranks that no scientific hypothesis can be proven due to the problem of induction (look it up) but it can only be falsified. Progress lies in the continuous, relentless, falsification of hypotheses, meaning that you have a long way to go, first learn about things and then backtest enough ideas until you come to a point you have something to try in real trading. A well-known author (I am not going to make a sales pitch) has said it nicely. Proper backtesting requires that you are an expert in: 1. programming 2. trading 3. systems simulation 4. statistics and probability Only 1 out of 10,000 people meeet these qualification, maybe less. You are certainly not one of those.
Yes, I did, most artfully done. You have real talent. Now all you need is better subjects. They probably also deleted my post praising your work. I am sure you will use it inappropriately going forward.
Bill, and other pro-backtesting respondents, I cannot recall such eloquence here in years! Well spoke, all! Bill, please pitch, I don't know what author you refer to. I got started on Babcock.
no i am not, and that is why i don't backtest, i don't know programming, I never took statistics... i just trade, maybe beginners luck, maybe not. buy low sell high, sell high cover low. a strategy this simple doesn't need to be backtested it's an axiom of the market. there is no telling from previous situations how the market will react right now in this same situation.
"I know of no way to validate conjectures concerning technical trading without back testing." --William Eckhardt
666, is that IntradayBill's well-known auteur? Thanks for the reminder. I am so old that I have forgotten all the stuff I read years ago. I have tossed most of it, down to only twelve trading books on the shelf above my head. I keep them close while trading hoping for mental osmosis.
Alfobs, you are indeed a man of few words, a rarity here, with only sixteen posts in two years, and this only your third post this year. You packed a lot into it. Care to dialogue a bit? This thread is dead anyway.
Yes, Richard Dennis' former partner. Here's another great quote on backtesting: "Backtesting is not a viable means for finding anything out." -- Jack Hershey