Nothing new there, LOL. I understand the allure of back testing, and have even referenced when TASC did a 10 year back test of opening only orders, which showed how well they work. My point is simply, yes backtesting can help show what cannot work, but cannot tell you what will work going forward. Too hard to duplicate all the outside influences on the markets. All the best, Don
Don, I would go one step further and state that backtesting does not do jack***. Not even the ones that cannot work can be discovered! The only thing backtesting is good for is testing to see if code is working. I am speaking with experience from a pigeon-holed opinion however...I trade Forex and MT4 is the platform where backtesting really sucks. However Don your fundamental points still stand as far as I am concerned across all backtesting platforms. ES Backtesting may tell you what cannot work, but in no way can tell you what will work going forward due to outside elements.
Don, I just think you haven't given enough thought to algorithmic trading. At what point do you believe it works? 3 years and 3,000% net profit good enough?
I have no problem with algo trading, many of our people do it. They do, real time, real money, and are always modifying the algos to fit current changes in market conditions. Algos, especially those developed by successful traders are great... but, even the the most robust loses its' effectiveness over time, thus the need for constant modifications. Most traders look for making profits, not ROI, an entirely different thing IMO. After they make a few $million, then ROI becomes more important, and they seek return. In the early years, they need to make $250k, $500k whatever, based on maybe only a $25k or $50k account. Is that 1000% return? Or is it just really hard work, dedication, and application? Sort of like the human interpretation of reality based trading needs some review from time to time. All the best, Don
Various. Some take our basics and apply their own tweaking, and then automate. Some use "canned" systems, and a few have had their own ideas programmed by others. Some from within firm, some outside help too. As long as they work, right? Don