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Backtesting Tip- What You May Be Doing WrongThis part of trading is very unattractive to most people or simply performed incorrectly. There is nothing flashy about back-testing and it requires time, work and patience. Most individuals interested in trading will avoid this part of the job all together at first or use an automated approach to testing, leading them to failure after failure without ever acknowledging the issue! I know the idea of so much work consisting of this much time is daunting but you will learn to appreciate the process. Even if you never like testing a strategy, you don't really have much of a choice. You will eventually develop some way of testing/monitoring your trading strategy & performance because without this, I can almost guarantee you will not succeed. I have touched on many of the back testing mistakes in the past and will discuss more in the future I am sure- but today I am going to answer a crucial question that has been asked to me several times. When Back testing a strategy, do I need to test the strategy for each individual market (ticker) I am trading? The answer to this question is YES! Let me clarify exactly what I mean so there is no confusion- As an example, lets say you have created a strategy and tested it correctly on GOLD (XAUUSD). Your test results show that this strategy DOES work when trading gold and maybe you have successfully used it in your live account as well. This DOES NOT mean that this strategy is going to work when trading Silver or EURUSD or TSLA. You must test each market (ticker symbol) separately, as results will vary wildly. A strategy that is profitable while trading one market may not be profitable in another! It is important that you gather proper data points in regards to this strategies performance as well, in order to identify any changes in results over time. It is not uncommon to have to make adjustments to a strategy over time as market conditions and behavior change- to ensure you remain profitable. In summary- each market (or ticker symbol) must be treated as its own entity, therefore your strategy needs to be tested for each individual market you plan to trade it in. After you have tested a strategy and it is producing profits, you will want to monitor this strategy, in order to determine if you are making trading mistakes or simply need to make new adjustments to accommodate recent changes in market conditions, or behavior. I know this was a short one but very important! I hope this was helpful and if you have any questions or would like to use the backtesting tool that I use- please leave a comment and I will follow up asap!
Education
by Alec40
2
📈HOW TO RECOVER FROM A TRADING LOSS📉 🔰Analyze the reasons behind the trading loss: Understanding what caused the loss is essential to avoid repeating the same mistake. Analyze the market conditions, trading strategy, and emotions behind the loss. 🔰Stick to a trading plan: A trading plan acts as a blueprint for a successful trading journey. Follow your trading plan and avoid any impulsive decisions. 🔰Cut losses short: Don't hold onto losing trades in the hope of recouping your losses. Cut the losses immediately and move on to the next opportunity. 🔰Diversify: Diversification can reduce your overall risk. Spread your investments across multiple channels and avoid investing all your money in a single asset. 🔰Learn from successful traders: Successful traders can provide valuable advice and insights into trading. Follow their strategies and learn from their experiences. 🔰Reduce the trading size: To avoid significant losses, reduce your trading size. Start with small trades and gradually increase the position size. 🔰Control emotions: Emotions play a significant role in trading. Avoid trading based on emotions and stick to the trading plan. 🔰Stay informed: Keep abreast of the latest market news and events. Follow economic indicators, news releases, and expert opinions. 🔰Take a break: Taking a break after a trading loss can help you clear your mind and recharge. Take time to assess your trading journey, re-evaluate your strategy and come back refreshed. ❗️Remember that trading losses are part of the journey, and everyone experiences them. Recovering from a loss requires discipline, patience, and a willingness to learn from mistakes. Stick to your plan, manage risk, control emotions and with time, recover from the loss. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that
Education
by ProSignalsFx
12
Which Moving Average Strategy Crushes MA Crossovers? This...If you read last week’s article, you saw results for the famous (or infamous!) moving average crossover. It bombed vs buy and hold over the last 10 years, even when using take-profit and stop-loss levels. So, how do moving average bounces perform with the same exit levels? That’s what we’re testing today… The Trading Truth Test Setup Our setup is the same as last time, except we just need one moving average. Market: the S&P 500 index (using SPY to trade it) Timeframe: Jan 1, 2013 to January 31, 2023 Bar interval: 30 minutes. Moving averages: 50 bars (simple moving averages, meaning every bar gets equal weight, unlike with exponential) Starting Equity: $25,000 Max % of Equity Per Trade: 3% Commissions, fees and taxes. To keep things super simple, we’re again assuming these are all zero. How Is “Bounce” Defined? Traders look for ricochets off moving averages in a bajillion ways. Let’s be real: most just eyeball charts without real rules. That won’t work for rigorous renegades like us, though. :-) So, for Test A, here’s how we defined a bounce when price is above the MA: A price bar’s low is above the moving average The next price bar’s low touches or pierces the MA for one bar. (A close below the MA is ok.) The bar touching or piercing the MA can’t go more than 0.5% below the MA The next bar’s low must again be above the MA. Flip these rules for a bounce when price is below the MA. I know, I know… many bounces don’t happen until 2 bars (sometimes more) hover on or below the MA. We're keeping the criteria here simple. We define Test B the same way, except with an extra filter: The 50-bar MA needs to be sloping up at least 0.5% over the last 25 bars for long trades (and -0.5% or less for short trades). Alrighty, now, let’s check out the results… The Test Results Like with the MA crossovers test before, let’s first look at how plain ol’ buy and hold did over the same period. If you parked your cash in the S&P 500, your money would be worth 2.9 times as much by the end. Pretty good. So how did Test A do? The ending equity after 10 years was $40,112.74, 1.6 times your money with 24.27% max drawdown. Test B, in which we only took trades if the MA was sloping (trending) enough, we ended with $43,149.00, for a 1.7x return with only 17.75% max drawdown. That makes the return on risk much better than Test A. Yet, while these returns beat the pants off of our MA crossover tests, boring old buy and hold still whooped them both. What Would You Change About This Bounce Strategy? Trade a different market? Longer or shorter time frame? Tweak how a bounce is defined? Comment below to share. Also, please let me know: what else do you want to see tested?
SP:SPX
by TradingTruthseeker
GOLD Barrick Gold Options Ahead of EarningsAfter we hit the 1st price target in the last chart: Now you should know that GOLD, Barrick Gold Corporation, is the usual suspect against the higher inflation numbers. Looking at the GOLD Barrick Gold options chain ahead of earnings , I would buy the $18 strike price Calls with 2023-3-17 expiration date for about $0.81 premium. If the options turn out to be profitable Before the earnings release, I would sell at least 50%. Looking forward to read your opinion about it.
NYSE:GOLDLong
by TopgOptions
Trading Truth Test: Do MA Crossovers Really Work?If you’ve ever sat up late at night watching tv, you may have seen an infomercial for software to become a day trader. They make trading sound so simple. Buy when a green arrow appears on the chart. Sell when a red arrow pops up. You’re snickering right now because you already know it doesn’t work. Yet so many traders talk about moving average (MA) crossovers in a similar way. Put a shorter time period MA (like 21 bars) on a chart and wait for it to cross above longer one (say, 50 bars) to buy. Do the opposite to sell. So how well does it really work? Let’s jump in and find out… Testing the Fabled Moving Average Crossover My 21/50 moving average crossover example above is a semi-common one people use. Of course there are others, like the 5/8, the 8/13 and the 13/21. 5, 8, 13 and 21 are all Fibonacci numbers, so people believe they have special powers. That’s probably a self-fulfilling prophecy since so many people use them. But that’s a test for another day. On to the rules!... The Trading Truth Test Setup Market: the S&P 500 index (using SPY to trade it) Timeframe: Jan 1, 2013 to January 31, 2023 Bar interval: 30 minutes. I chose 30-minute bars instead of the 2-minute or 5-minute bars many day traders use, just to smooth trends more. The less we can get caught in chops, the better. Moving averages: 21 and 50 bars (simple moving averages, meaning every gets equal weight, unlike with exponential) Starting Equity: $25,000 Max % of Equity Per Trade: 3% Commissions, fees and taxes. To keep things super simple, we’ll assume these are all zero. That’s borderline-realistic if you’re trading in a retirement account with a broker not charging commissions (you’d still have to pay exchange fees). The A/B Test Rules Rules for Test A This is the classic moving average crossing strategy. Whenever the 21 MA crosses above the 50 MA, buy. And every time the 21 MA crosses below the 50 MA, sell. That means, we exit whatever trade we’re in when we get the opposite signal… and then jump in going the other direction. Easy fo sheezy. Rules for Test B Everything is the same here, except for when we’ll take profits and losses. For this bad boy, we’re gonna use the 21-bar average true range (ATR) as both a trailing stop-loss and a trailing take-profit. Specifically, we’re using twice the 21-bar ATR (based on the previous bar’s closing price) for extra wiggle room. If we’re still in a trade when we get a new entry signal (MA crossover), we don’t take the trade. ‘Cause we’re rebels like that. One other quirk for Test B: if we hit a take-profit level in the same bar as a stop-loss target, I assumed we took the profit first. It didn’t make much difference overall, as we’ll see… The Test Results Before we see how Test A did vs Test B, the real baseline is just ye ol’ Buy and Hold. If you plunked your money into the S&P 500, your money would be worth 2.86 times as much by the end. Not bad for doing nada. So how did Test A do? No bueno. The ending equity after 10 years was only $25,091.74, which is barely breakeven. The one bright spot is the max drawdown, at 5.0%. It’s not hugely surprising, since MA crossover strategies are highly prone to losses when the market is chopping around instead of trending. And the market sloshes around way more than it trends. This pure strategy (only exiting a position on the next crossover) also tends to give back most profits, since it waits so long to exit. Given the take-profit targets and trailing stop-losses in Test B, how did we fare there? We ended with $27,261.39, a 9.0% return. Definitely better, especially given the 1.9% max drawdown, but nowhere near as good as buying and holding — especially when you factor in all the trading you’d have to do. What to Test Next Using some kind of trend indicator, like Super Trend or Linear Regression, to filter entry signals could help reduce losses. Picking a different market might also get us better results. For example, I saw someone on Youtube say the EUR-GBP forex market works well for MA crosses. Testing longer-period moving averages would also smooth the price action more and be less likely to cross as much in ranges.
SP:SPX
by TradingTruthseeker
2
Perfect BBands Strateg. w/ Indic. SetupThis one is for anybody looking to try a new consistently solid strategy with multiple intuitive indicators setup that is not automated - yet. But, since the strategy part of this setup relies mostly on a simple but effective BBands strategy (I've found best results with 15m), it shouldn't be that hard to get automation setup. As it is now, the indicators included in this setup work perfectly together to give even beginner traders a rather good idea of where the trend is going and when to enter/exit their trades. This is a great setup for those using a free TV account since it combines certain indicators together by making use of the Pine Editor. So technically, only 3 indicators/strategies are used. In this case, 2 indicators and 1 strategy. All features of the indicators combined in terms of being able to adjust settings for each can still be fine tuned and have not been negatively impacted by the merging of multiple indicators. If you like this setup or have any suggestions to improve it, please let me know and if you consider testing this out with automation - send me a private message and let's discuss it.
EEducation
by Y2K_B
BANKNIFTY : on daily supportBANKNIFTY closed is near major daily support level. Once it break we may see next daily support in coming days. Levels of daily, hourly & 15min timeframe marked on chart for today. Follow Price action & trend Like, Share, Comment for regular updates. Disclaimer I am not sebi registered analyst My studies are Educational purpose only Please consult with your Financial advisor before trading or investing I may be 100% wrong as its my personal trade. First Learn and then remove "L"
NSE:BANKNIFTY
by ChartsSpecialist