How do you validate your trading idea?

I find when back testing it's important to test out various periods of time, you can pinpoint area's that the strategy did not perform as expected, investigate and improve the method

For example, back test month by month if using 1 hour charts, if your strategy is supposed to perform consistently... if you notice any "abnormal" months investigate to locate any flaws, either ditch the idea if the flaws are too great, or adjust it as required (be aware of "form fitting")

In regards to forward testing on a demo account:
I make sure that the strategy won't be affected by Broker related issues, delayed execution spread etc. < This applies to mainly very short term strategies, for longterm strategies these things shouldn't be an issue.
If you are using a scalping strategy you should test it out on a cent/very small live account, this will ensure that real spread and execution is used.
If not a scalping strategy demo should do just fine to get an idea of how well your strategy will hold out.

Steps:
1. Theory... pencil and piece of paper
2. Programming/Back testing to identify weaknesses in the strategy as well as possible adjustments without form fitting, ensure the method works regardless of period of time it is applied to... example, if used last month was it good? but is the performance consistant if used last year during the same month etc...
3. Try to improve the Theory (step 1), discuss theory with others to try and spot weaknesses that you may have overlooked
repeat 1-3 as needed until confident with the strategy
4. Live/Demo Account depending on the "type" of strategy
5. Compare the Live/Demo results with Back testing results, look for inconsistencies in performance, if any are found... figure out what is causing them and if they can be fixed. Back to steps 1-3 if needed until there are no inconsistencies and performance is acceptable
6. Trade using a healthy sized Live Account
7. Monitor the Account to ensure that everything is still consistent


PS. The strategy should be programmed, even if it's visual, find a way to program it regardless of how long it takes. This will eliminate human error that happens when visually backtesting data.
An Automated Strategy in my opinion = Greater Consistency
than a Human using the same method Manually

Also, automated strategies will make it very easy to find potential flaws and areas that you can improve, and by improve I don't mean form fitting, I mean trying to create a better theory that can Trade the Markets better than the 1st method

I don't know if I consider it a waste; I've never asked that question before. But I do consider it as not particularly useful to me. If it's useful to other people, then good for them. It's not my purpose in life to convince people otherwise.


I have already implied this in my previous answer.

If I had answered "Yes I would still not consider back-testing even if a system can be coded objectively" is it your intention to debate me on that point? Would the outcome to that debate add anything to your bottomline?

I've already implied my methods are discretionary, so this question of "considering" back testing is moot.

If you think back-testing is a good idea, you should go ahead and test your back-testing idea. You certainly do not need me or anyone else to validate your beliefs.

Thanks skenobi for your reply. No, my intention is not for any kind of debate etc. Different traders have different trading styles and whatever works for one is good for him/her. After all, what really matters is the bottom-line. Automated or discretionary, back-tested or non back-tested, are all secondary.

Thanks and regards