Objective of backtesting strategy
Trading strategy must include three main component which is
1. entry strategy
2. adding position in wining position
3. exit strategy
4. risk adjustment
OBJECTIVE OF BAC KTESTING STRATEGY IS TO LEARN THE FOLLOWING
1. PREPARATION: always prepare night before but during back testing session that means prepare what you are doing during that session write down what you plan is during back testing screen shoot, execute when it meets your criteria.
2. NEW VOLATILLITY: any news that might cause large volatility in the market.
3. EXECUTION: execution is trading you plan no matter what fear you might be facing
4. MEASUREMENT: in this section i want to talk about measuring your stop loss and target risk reward zones like 1% or 2% return
5. SCREEN SHOOT OR VIDEO RECORD MY PC SCREEN: this is about reviewing how back testing session was going.
Clarification for entry strategy
Entry must be taken on 15 minutes chart i know this lot to handle but goal is to focus on small watchlist execute our plan.
1. 4hr chart for trend analysis: on 4hr chart price must indicate where overall trend without any indication emotional of where price will go because nobody knows where it will go. in trend analysis will focus most on candle to study momentum
2. 1hr also this timeframe will help us to analysis which market phrase are we in so that we can identify what our objective is going to be. if we are going to trade range so that we can identify zone for execution. or if it is trend identify those pull back zone.
3. 15minute chart this is execution or entry signal; mostly on entry signal will shall focus on how candle formed in those zones.
Adding position on winning trade
1. we shall add position to winning trades when price is profit for about 2% and this might be done by trading half of the position that trade initially or quarter of position
EXIT STRATEGY
exit strategy this is one thing that I have been struggling with most of the time i didn't have exit strategy on trade that I took every time.
on this strategy we want to execute trade every day which means 20 trades a month and we want to get return of +20% return in a month;
let break down some numbers
20% months
5% week
1% day
because this is risk business, most of the time we can loss that 1% we risk every day means that
let’s break down some other numbers based on other valuable which does include some loss that we may face during trading session.
DAILY O.5%
1.5%
2% 3%
WEELY 2.5%
7.5% 10% 15%
MONTHLY 10% 30% 40% 60%
this means that at the time we made about +2-3-4% a days that is best day ever. consistency is the key
we have to understand our risk because if not we are not going to know what our objective are....... understand our risk that means our stop loss profit target for 1%,1.5%,2%, and 3% on trades so that if our target is hit make sure to get out no matter what.
risk adjustment
sometimes in trading we might find our self getting out with big profit, loss, or break even.
so, we ought to have some metrics which help us to avoid some big loss or small or whatever because this business is risk so there must be some risk adjustment strategy to put into account so that we can prevent ourself from suffering those major or big loss.
risk adjustment
1. stop loss must be 1/2 of average winning trade during the period that i have been trading. for example, average winning position is 100 that means i must be risking 50 as stop loss on the other trade.
2. after price rise in my profit I must rise my stop loss
1% prof stop loss 0.5%
1.55 prof stop loss at break even....
what to expect during back testing session?
1. sometimes i might spend hours trying to find the trade but find none so never try to force the trades never ever try that
2. sabotaging myself because things aren't going as i was expecting to go
3. distracting myself by using phones
4. find myself uninterested in back testing session so try and respect what a have plan go thought that pain because its what going to make me a good trader.
putting things together that I learned go through that like two times so that I can learn and get all those nuances that I can get in.
NEVER RUSH THIS PROCESS
1. entry strategy
2. adding position in wining position
3. exit strategy
4. risk adjustment
OBJECTIVE OF BAC KTESTING STRATEGY IS TO LEARN THE FOLLOWING
1. PREPARATION: always prepare night before but during back testing session that means prepare what you are doing during that session write down what you plan is during back testing screen shoot, execute when it meets your criteria.
2. NEW VOLATILLITY: any news that might cause large volatility in the market.
3. EXECUTION: execution is trading you plan no matter what fear you might be facing
4. MEASUREMENT: in this section i want to talk about measuring your stop loss and target risk reward zones like 1% or 2% return
5. SCREEN SHOOT OR VIDEO RECORD MY PC SCREEN: this is about reviewing how back testing session was going.
Clarification for entry strategy
Entry must be taken on 15 minutes chart i know this lot to handle but goal is to focus on small watchlist execute our plan.
1. 4hr chart for trend analysis: on 4hr chart price must indicate where overall trend without any indication emotional of where price will go because nobody knows where it will go. in trend analysis will focus most on candle to study momentum
2. 1hr also this timeframe will help us to analysis which market phrase are we in so that we can identify what our objective is going to be. if we are going to trade range so that we can identify zone for execution. or if it is trend identify those pull back zone.
3. 15minute chart this is execution or entry signal; mostly on entry signal will shall focus on how candle formed in those zones.
Adding position on winning trade
1. we shall add position to winning trades when price is profit for about 2% and this might be done by trading half of the position that trade initially or quarter of position
EXIT STRATEGY
exit strategy this is one thing that I have been struggling with most of the time i didn't have exit strategy on trade that I took every time.
on this strategy we want to execute trade every day which means 20 trades a month and we want to get return of +20% return in a month;
let break down some numbers
20% months
5% week
1% day
because this is risk business, most of the time we can loss that 1% we risk every day means that
let’s break down some other numbers based on other valuable which does include some loss that we may face during trading session.
DAILY O.5%
1.5%
2% 3%
WEELY 2.5%
7.5% 10% 15%
MONTHLY 10% 30% 40% 60%
this means that at the time we made about +2-3-4% a days that is best day ever. consistency is the key
we have to understand our risk because if not we are not going to know what our objective are....... understand our risk that means our stop loss profit target for 1%,1.5%,2%, and 3% on trades so that if our target is hit make sure to get out no matter what.
risk adjustment
sometimes in trading we might find our self getting out with big profit, loss, or break even.
so, we ought to have some metrics which help us to avoid some big loss or small or whatever because this business is risk so there must be some risk adjustment strategy to put into account so that we can prevent ourself from suffering those major or big loss.
risk adjustment
1. stop loss must be 1/2 of average winning trade during the period that i have been trading. for example, average winning position is 100 that means i must be risking 50 as stop loss on the other trade.
2. after price rise in my profit I must rise my stop loss
1% prof stop loss 0.5%
1.55 prof stop loss at break even....
what to expect during back testing session?
1. sometimes i might spend hours trying to find the trade but find none so never try to force the trades never ever try that
2. sabotaging myself because things aren't going as i was expecting to go
3. distracting myself by using phones
4. find myself uninterested in back testing session so try and respect what a have plan go thought that pain because its what going to make me a good trader.
putting things together that I learned go through that like two times so that I can learn and get all those nuances that I can get in.
NEVER RUSH THIS PROCESS
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