Gathering number of trades vs Gathering number of months:
//Thread//
Num of trades.
A lot of people in this space focus on gathering a set amount of trades when they backtest for example the general rule that goes around is 100 trades gathered and that's you ready to go.
//Thread//
Num of trades.
A lot of people in this space focus on gathering a set amount of trades when they backtest for example the general rule that goes around is 100 trades gathered and that's you ready to go.
There is quite a few flaws with this ideology.
1. It doesn't factor the timeframe of execution
2. It doesn't account for market cycles
3. It builds this false belief that after a set number of trades you are able to trade live.
1. It doesn't factor the timeframe of execution
2. It doesn't account for market cycles
3. It builds this false belief that after a set number of trades you are able to trade live.
If you trade the m1 and scalp you will be able to gather a 100 trades easily within a 1month period and with this ideology that would be you done with the backtesting. This leaves your strategy untested in a variety of different market cycles, trends, ranges etc.
You won't have a full understanding of when your strategy works and doesn't ie your strategy works well in trending environments. It also sets a limit on your testing because most people are lazy with backtesting and think after they hit that 100 that's them sorted
and that they no longer have to test the strategy, this only hinders the trader. Backtesting should be completed constantly even when trading live, the more data you have the better you will be able to optimise the strategy. If you stop at 100 trades then that's all the data
you will have to be able to analyse, optimise and see what works best for you. However if you keep testing weekly you will progressively continue to build up a large sample set which will be able to be studied far more in depth than just 100 trades thus allowing you to tweak
and adapt the strategy to suit your needs, whether its to increase the win rate, risk to reward or the amount of trades.
Number of Months
Number of Months
This is my preferred way of gathering data by focusing on the amount of months I can gather on a strategy it allows you to gain confidence that the edge will play out as you have years of data behind it. Depending on the strategy you may not reach 100 trades but you will have
over 5 years of data. I would much rather have 50trades over 5 years of data than 100 trades over 1 month of data.
By backtesting over years you can get an idea of market cycles, what conditions your strategy works best and what months are best for you.
By backtesting over years you can get an idea of market cycles, what conditions your strategy works best and what months are best for you.
If your a scalper then obviously 5 years of data may seem a bit extreme but I personally think a minimum of 1 year of data should be accumulated even if your scalping.
Overall
Its up to you which way you want to approach your backtesting both work but in my opinion focusing on the data set in terms of months is a far more logical approach that will build more confidence in your edge as you know it plays out over a longer period of time.
Its up to you which way you want to approach your backtesting both work but in my opinion focusing on the data set in terms of months is a far more logical approach that will build more confidence in your edge as you know it plays out over a longer period of time.
First thread done, may of been a shitter but if you gained any bit of value from it give it a like and rt lads.
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