What’s the most effective way? How do you actually backtest? Backtest every single thing? Or pick out random chunks to test?
Manually back testing never comes out true as human error often happens, time to learn to program and every test comes out the way you programmed it. I was lazy in my beginning as I didn't want to learn to program and guess what, I lost even more money and took more years to lose. Or hire someone to program for you.
So you are running software like for example Amibroker and know how to program already? Or can you perhaps not program and are using what method?
Hello iamnewuser911, I would recommend learning to program trading strategies you think will make you money over time and then back test them. Back testing a programmed strategy will save you alot of time and you can see the results of the back test faster. If you want to manual back test, back test for +200 recent trades. You can just use a spreadsheet.
If you don't want to learn to program, tell me your strategy and if I think it has potential, I'll code it up for you and share it with you.
Do it manually, every single trade should be analyzed. You should understand how markets work and why a traded did so well or did so bad. With pure number crunching you will miss a huge amount of information and knowledge. You will push a button and later a result will popup without any explanation how the result was built up from the individual trades. As you will not have detailed information about the individual trades it will be impossible to improve your system. Too many people dream about a computer that will do all the work and will make them rich. There is a reason why big successful funds use computers mainly for HFT. That is probably the only thing that till today works and is under control. Only problem is that this method takes time, a lot of time. But running the wrong strategies will take a lot of time to and will not lead to a good result. All this is based on my personal experience in trading. At start I did not know how important manual was and I started also with a computer that did a lot of number crunching. Laziness does not work, thousands of hours studying does. Once you have a good system you can use the computer to make your life more easy. When the work is done you may be a bit more lazy.
Hello schweiz, Yes, the goal is to be rich or wealthy with a trading computer/robot(s). Why else would we be trading for?
Well, then you should start to do the manual work and make 10,000 hours. Or keep dreaming and realize just before you die that you made the wrong choice your entire life. World famous HFT funds trade with computers in milliseconds. Why? Because if they hold position longer the net result declines fast. In other words: even these people with almost unlimited amounts of money, the best computersystems, the best connections, the best commissions, the best executions and the best people are not able to make decent money when staying longer than milliseconds in a trade. Can you do with less resources what they cannot?