Question on BackTesting

I've heard this statement so many times yet, I'm still not really sure what it's all about.

Let's say, I have a system that uses 3, maybe 4 indicators. And, based on what I "see" from these indicators (maybe a little consideration of the "fundies" as well?), will determine when I trade, when I exit, and so forth.

How would one go about "backtesting" such a trading stradegy?

I can understand backtesting an EA. Just plug it in a testing program and let it do it's thing. But, manual trading by indicators, I'm not sure how you would backtest something like this???? Backtesting a manual trading system that is...

Thanks in advance.........

Back testing is a good indication that the system might works, but I like forward testing better; you can learn a lot more by seeing the system in action most importantly your money managements skills being included as you see the trades happening before your eyes. My 2 pips.

scalpt

Forward testing is, I'm assuming, as you put a trade in, according to "the system" and see how it reacts. Obviously, record all you see during and after the trade in a journal, right?

I know this may sound "simple minded" but, just trying to really get a handle on this testing stuff...

Exactly,

Backtesting may give you a general idea that your system can be profitable but the only way to really test a method is to take the plunge. I believe that you need a rigid set of rules and you need to be disciplined enough to stick to them. Great idea to keep journal too - it's invaluable to be able to look back over the trades you took and why.

You may tweak a few things over time but it's important to give the system enough time to prove itself. We all have poor days, weeks but in the grand scheme of things that doesn't matter a jot if you can be profitable long term.

As many of you know I'm not really a fan of indicators but that's my preferred style. I suggest you forward test your method, following your pre-written rules on either a demo or micro account initially.

The market isn't going anywhere so there's no rush to 'dive in head first' until you're comfortable with your chosen method/system.

Hope that helps in some small way and may the pips be with you

Kind Regards
Steve