Hi All,
I wanted to chime in here with my take...
First of all lets be clear on something... yes static systems will fail you eventually but that is not to say the approach will fail. What I mean but this is that if your stops and targets etc are just arbitrary figures like 10 pips all the time no matter what then yes when volaitility increases you will get whipped out only to see the position eventually go on to the target.
But if for example like me you have an approach which encompasses dynamic stops and targets using support and resustance and swing points then you should be good to go for the long run and you can test this.
Why is this? well if you are placing you stops behind a recent swing then you will automatically take the market volatility into account and if your targets are at a support or resistance zone then you will also be taking the market dynamic into account.
Past this you need to understand the market conditions... trending, consolidating or reversing. Once you have all of this you will be onto a winner.
When I first started trading and people told me that I will always have to change my system I got really worried and thought I can't keep going through this process, but then when I understood that actually I can have the same philosophy and just adjust stops and targets etc I was ok.
Then what ever you are testing make sure it is goes through all periods... consilidation, trending etc to see how it reacts to them. Note that it won't perform well in all conditions so don't expect this, you just need to come out net profitable. More importantly don't cheat yourself, take all setups even the losing streaks.
Finally when it comes to live testing keep a detailed journal and keep updated performance records so as well as your own trading record go pver every day and trade in hindsight to see how you fair against th eactual rules as we all know the traders screw themselves in the end.
Just my 2 cents.
Nexas
I wanted to chime in here with my take...
First of all lets be clear on something... yes static systems will fail you eventually but that is not to say the approach will fail. What I mean but this is that if your stops and targets etc are just arbitrary figures like 10 pips all the time no matter what then yes when volaitility increases you will get whipped out only to see the position eventually go on to the target.
But if for example like me you have an approach which encompasses dynamic stops and targets using support and resustance and swing points then you should be good to go for the long run and you can test this.
Why is this? well if you are placing you stops behind a recent swing then you will automatically take the market volatility into account and if your targets are at a support or resistance zone then you will also be taking the market dynamic into account.
Past this you need to understand the market conditions... trending, consolidating or reversing. Once you have all of this you will be onto a winner.
When I first started trading and people told me that I will always have to change my system I got really worried and thought I can't keep going through this process, but then when I understood that actually I can have the same philosophy and just adjust stops and targets etc I was ok.
Then what ever you are testing make sure it is goes through all periods... consilidation, trending etc to see how it reacts to them. Note that it won't perform well in all conditions so don't expect this, you just need to come out net profitable. More importantly don't cheat yourself, take all setups even the losing streaks.
Finally when it comes to live testing keep a detailed journal and keep updated performance records so as well as your own trading record go pver every day and trade in hindsight to see how you fair against th eactual rules as we all know the traders screw themselves in the end.
Just my 2 cents.
Nexas