How To Win

Discussion in 'Professional Trading' started by forestgril, Aug 13, 2008.

  1. It is not so difficult to test a technical strategy depending on a certain timeframe without real trading, even if it is a little judgmental (which often constitutes to a good system).


    In Metatrader the answer is the F12 button and changing the position of the gray triangle in the left down corner (when auto scrolling is off). You have to move it to the right down corner. This way You never see the next price bar untli You press F12.

    You can download a pair history, which You don't know. If Your system is good, it should work on different pairs (better
    or worse on each one of them).

    XXXXXXXXXXXXXXXX

    Then start scrolling the data in a totally random way and "guesss" using Your indicators, what will happen in the next
    bar. If You think, there is a high chance of a certain move of a price, (virtually) set Your limit orders for the next bar
    (and note them) or enter at the closen price, which was at the end of the last visible bar. DO NOT FORGET to specify the exact stop-loss price BEFORE moving to the next bar!!!

    After that press F12 and check if the stop loss or a limit order was hit. If it was, write down an entry point or a loss in points in Excel (add spread to the loss now or preferably later at the end of testing).

    If You entered the trade on limit or the stop loss was not hit, move the stop loss to protect the profit or lower the losses (if desired) or close the trade and write down the profit or loss (adding and subtracting the spread) in Excel. Then proceed to the next bar with F12 button or....

    GO TO POINT XXXXXXXXXXXXX

    THIS IS THE WAY TO TEST YOUR JUDGMENTAL TRADING STRATEGY.


    REMEMBER:
    It is essential to test Your system first for at least 100 trades. You are profitable this way if:

    Your_profits - Your_losses - spread*number_of_trades >= number_of_trades

    (It means that You should have at least 1pip (point) average profit on 1 trade (including spreads)).

    If You are so lucky to see this effect, then make a chart of the total amount of points vs number of trades.

    THE CHARTED CURVE SHOULD GO UP ALL THE WAY with deviation down (preferably) less than 23% of the total amount of points.

    If it is so, You should test Your system the same way for another 400 trades. If the curve of total points keeps going up
    all the way up to 500 trades, do not waste Your time anymore!!!! START TRADING THIS SYSTEM!!!!!

    If not, You must change/modify the system and start testing again.

    From my experience, It is possible to test from 5-30 trades in an hour, so it would probably take a whole week to fully test a difficult system for 500 trades.


    After such an amount of work (very very hard work!!!) spent on testing, You would not like to change ANYTHING during real trading, unless You test it again for 500 trades. That will keep You disciplined.

    GOOD LUCK!