DislikedWhat a great post! Love to see that you are taking the time to test!!!! Notice that you are finding GBP/USD really difficult to backtest -- which means you would find it really difficult to trade live right now. What you need to do is backtest exactly as you would trade live. This means draw your trendlines, support lines and any other tool(s) you use to trade live. Now, move forward 1 candle at a time. See where your entries would trigger -- write down your entry price, stop, and TP's, along with entry time. Next draw a horizontal line on your chart for your stop and one for your TP....keep going forward 1 candle at a time and manage your trade as if it were live. If your stop is hit, note -X pips or if your TP is hit +X along w/exit candle. Keep updating your chart as if you were sitting in front of it trading for the period of time.
Test at least 50 to 100 trades to start and get a feel for cable. Sometimes the candles are very large and the stops make certain trades unreasonable, sometimes you can plan to enter at a retrace of price -- test for yourself and see what you are comfortable and profitable with.
Great job again! Keep up the hard work necessary to become a profitable trader!!
PipsIgnored
In backtesting, I also review the maximum drawdown and maximum run up as a percent of my stop and TP. This shows how valid and conservative a bid is. If I get 95% of the total run up, I am either really good, or am taking a big risk and should be locking in profits and moving stops in live trading. Same for draw downs, if price drops to 50% of my stop, that's a good thing, butif it is 90% of it, that is too close for comfort (andif it is over 100%, I lost the bet...greater than 200% and I need to rethink my stop logic).
Backtesting can be a detailed process, but at the end of the day, you will have huge amounts of data to mine and be able to gain insight to your trading method to see if it meets your trading style. I have backtested Phillip's 4hr and 5min methods on the Euro and am in process on the Loonie with favorable results.
Pip On!
Rick