I've found backtesting helpful, and profitable. I'm a systematic trader because that's what is comfortable for me. But I do not deny that there are other ways to make money. Just a few points: -Backtesting is worthless without proper money management and allocation. Backtesting is only a part of developing a profitable system. -Most backtests I have seen in public are too short. -Many systems require a filter to adapt to market conditions. One may backtest these filters, too. -I have backtested many more systems that do not work than systems that do work. There are a hell of a lot of systems that sound plausible but do not work. Over time, backtesting has allowed me to develop a feel for what might and might not work. Often now, I can look at the broad outlines of a system and determine that it is unlikely to work, so I don't bother backtesting it. But I don't use anything I haven't backtested myself, no matter who says it works. -I have backtested many other people's systems that they claim work, and over their same time frame, I have confirmed that they actually do not work. I think there is just a lot of lying or fantasy going on out there. -I suspect that experienced traders who claim that backtesting is not needed may be doing some form of internal/subconscious testing, based on their experience and feel for what will work. They are maybe less concrete types of people than I am. That's fine; their methods may work well for them. I'm just not that kind of animal. There isn't one way to do anything: there are many.
I am like you, very systematic, need my rules, need to do things in steps until something happens, then it is either "A" or "B". Can have 49 other traders tell me I am wrong on how I will trade some instrument, and I ignore everything they say, cause I have built and traded my systems many years. I really think you need 10,000 min. sample for day trading and long term 25 years or longer if you have the data. I backtest very little now, if it not going to fit into what I am doing now, most likely it won't work for me. I think most people leave things out of systems they show someone or post. I can post a signal to enter, but we all know there are filters that must be met to even allow that signal to happen like recent past charting. ie. Quad top but am getting a signal to buy into this, most likely if I would buy lower, breaking of a few pivot lows would negate a signal, so even though it is a signal in one way, price action disallows the signal altogether. Most people love entries are they take least amount of work, but when one has to learn when one can and can not take same signal, they now don't like the signal at all, and why there are so many poor day traders.
Not true. From the notes on Bot Destroyer: "I'm told by people who know him that he backtests all kinds of stuff." _____ Sim-traders and backtesters who do not understand things well may fail because they don't get the same fills. However, that does not mean backtesting has no value. Renaissance Technologies backtest everything and has made many, many billions daytrading their positions.
Backtesting can be part of winning trading. Backtesting has helped some winning traders. Systematically trading an inefficiencie can be part of trading and you know traders who trade this way successfully. Renaissance Technologies has made many billions backtesting and daytrading systematically-automated. However, I do know winning traders who only forward test, usually for small size. These these things said, I read all of your posts because I know you have beaten trading for lots and lots of money for many years. Also, I like the way you explain real-world trading. Actually, you and Lescor are two of my favorite posters.
No. But there are situations that a skilled trader may find hard to quickly backtest and there are reasons he may trade it with small size as Lescor has done. Skilled traders like Dustin who adapt are becoming more rare but are there. Glitches.. like the begging SOES bandit situation .. that may end quickly may come up. But yes, backtesting is another path.. as Renaissance Technologies exemplifies. Backtesting can gave great value. Expert coding is a great skill to have in many areas of life, but Dustin makes lots and lots of money over many years and is telling you the truth about what he does. - there is value in being savvy, quick on your feet, an experienced winner, and networking with smart people who share important information.
Not the same. This one interviews wining traders, A noted market structure specialist, A failed ex-winner who did not adjust & titled