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    Thread: How far in the past should we back test?

    1. #1
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      Default How far in the past should we back test?

      I have a question for those traders that use and/or develop trading robots. How far do they go in the past to back test? A month, a year, two years or a certain number of trades will do like 100, 200, 1000 trades to see the profitability?


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      Quote Originally Posted by Cratos** View Post
      I have a question for those traders that use and/or develop trading robots. How far do they go in the past to back test? A month, a year, two years or a certain number of trades will do like 100, 200, 1000 trades to see the profitability?
      One or two years should be enough for back test and of course you can do more too because it only need a few mins to do it. But you must also try it with live test too in demo account because market condition always changes too. It will be useless if the EA showing good result during back test but can't give us real profit while we use real money.


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      in my opinion, you need to backtest different time, I mean you backtest the long time as 3 years or higher and backtest small time like 1 year or few month, by backtesting long time, you test the stability of your tool and see the drawdown and for a small time you backtest the other parameters like take profit, stop loss, etc.


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      How about forward test? Is such thing exist? You know I just don't believe in back test, why would you test your method on the previous market? which already happen long long time ago? I can't understand that idea though, no offense. What important is now...the present!
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      Quote Originally Posted by Warren Bafett View Post
      How about forward test? Is such thing exist? You know I just don't believe in back test, why would you test your method on the previous market? which already happen long long time ago? I can't understand that idea though, no offense. What important is now...the present!
      Forward test would actually mean to try and run the EA using a demo account or even cent account type. Thats the only test i rely on as backtest are only to see if the EA functioning perfectly or not.


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      Market conditions can change over time but a good solid trading strategy will always work when the requirements are met.
      Testing for a long period of time is good but not really necessary. The user must know which market condition is best for the EA and only use the EA when the market condition is proper.


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      Borneo Scalper (05-03-2018), moneygrows (04-30-2018), piphunter z (05-02-2018), Unregistered (1)

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      Quote Originally Posted by mBauer View Post
      Market conditions can change over time but a good solid trading strategy will always work when the requirements are met.
      Testing for a long period of time is good but not really necessary. The user must know which market condition is best for the EA and only use the EA when the market condition is proper.
      Most people thought using an EA means they can just set it and forget, letting the robot runs continuously with no regards to market condition at that time

      This is a misconception that must be corrected if they are serious in trying trading with an EA because market is never the same and we need to adapt to its changes.


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      Borneo Scalper (05-03-2018), piphunter z (05-02-2018)

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      Some people only want to rely on something than do it themselves and that is the number 1 reason why people buy forex bots.
      Of course that is the first and biggest mistake for them because as you said, a bot is only for executing the program and in this sense it's not an AI which can think for itself and take the best action.


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      Borneo Scalper (05-03-2018), Unregistered (1)

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      Quote Originally Posted by piphunter z View Post
      Some people only want to rely on something than do it themselves and that is the number 1 reason why people buy forex bots.
      Of course that is the first and biggest mistake for them because as you said, a bot is only for executing the program and in this sense it's not an AI which can think for itself and take the best action.
      i read on the internet big financial institutions are now already starting to employ AI to trade and it is fast becoming a standard practice. The only one that trade manually will still be retail traders like us since most of us cant afford to use a real AI


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      i think trader has to test strategy for multiple year in past and at the present too to call it successful. if you have strong knowledge in coding, you can then create robot for your strategy and work with it. but years of practice and test still necessary to make sure strategy is successful in different market condition and times.


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