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Backtesting

  • Post #1
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  • First Post: May 8, 2020 5:15pm May 8, 2020 5:15pm
Hey Guys, How much backtesting do you feel is enough for a strategy?

1 month? 6 months? 1 year? or more? what do you feel is enough and why?
That depends on the timeframe you are trading off. Maybe look at it in terms of number of trades? Everyone will have a different opinion on this, but something like 100 trades would be a start...

Even more important than backtesting is forward testing though so once you're happy with your trading plan it's important to be confident in your ability to trade it in real life going forward.

All the best
20 years is best i think
the more the better
Quoting ChilledT
That depends on the timeframe you are trading off. Maybe look at it in terms of number of trades? Everyone will have a different opinion on this, but something like 100 trades would be a start... Even more important than backtesting is forward testing though so once you're happy with your trading plan it's important to be confident in your ability to trade it in real life going forward. All the best
I am trading of 1h tf, i know everyone would have differwnt opinions, just trying to see what everyone thoughts are really.

I normally do about 4-6 months, if i like the strategy, i would then do a full year.

Recently, i have come across a few strategy that are doing well for 2020, but then testing back some more, they were not doing that well for 2019.
Quoting HeyYou
who knows exactly. my feelings??? irrelevant af... my experience tells me: 10 years at least! however , backtesting alone is not enough (experience , again)... you need to check if the system can predict the future. so I'd suggest running a backtest from 2000 to 2010 to optimize the parameters, then a second backtest from 2010 to 2020 using the same parameters. ALSO (very important), you must consider real market conditions: swap, slippage & spread. remember that quotes are from the interbank.. therefore, slippage and spread have strong impact...

I do testing to figure out monthly and yearly returns, and use this to see if my strategy is good for what i want or not.

10 years of backtesting? seems like a lot, Would you still recommend 10 years on a 1H timeframe, or even a 5min time frame?
Quoting akamrp
{quote} I do testing to figure out monthly and yearly returns, and use this to see if my strategy is good for what i want or not. 10 years of backtesting? seems like a lot, Would you still recommend 10 years on a 1H timeframe, or even a 5min time frame?
well, I want a flexible system that survives in the long term under several market conditions... 10 years would be the minimum to see if the condition persists IMO.
Im VERY VERY new to this, and to be honest didnt do any back testing.

I may use incorrect terms, so pardon, in advance!

I knew what I was happy to lose (£100) in my case - Signed up to a broker and literally watch a few strategy video (probably not the best strategy to get started but I wanted to get in to it).

My current strategy is that I use bollinger bands & MACD and wait to see if it get a signal of up or down. I theb place my BUY/SELL

The issue is, I am seriously new to this. Since I started in March every trade has settled at a profit although my 'close at profits' are usually only a few £

A further issue that someone may be able to advise me on is scalping. Am a scalping if im closing at only a few pound(£) profit? I dont want to risk my account being closed and losing all my funds which is now over £300
Quoting dmorgan20
Im VERY VERY new to this, and to be honest didnt do any back testing. I may use incorrect terms, so pardon, in advance! I knew what I was happy to lose (£100) in my case - Signed up to a broker and literally watch a few strategy video (probably not the best strategy to get started but I wanted to get in to it). My current strategy is that I use bollinger bands & MACD and wait to see if it get a signal of up or down. I theb place my BUY/SELL The issue is, I am seriously new to this. Since I started in March every trade has settled at a profit although...
For a small account, a few pounds is a decent percent gain overall. I am not a scalper myself, so can't give you any advise but you won't be in trades for long and your not really looking to make big gains on pips either so making few pounds is good i guess.

I would suggest you open a demo account to try out your strategy, or at least backtest what you are doing. But if you turned £100 into over £300 in less than 2 months, that is a really good return.
  • Post #9
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  • Last Post: May 12, 2020 11:37am May 12, 2020 11:37am
Depends on the frequency of trades, if your system generates around 600 trades per year then a year of backtesting will be helpful in making statistically valid assumptions.
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