Before You Trade ANYTHING!

ForexGuy · #1 (**permalink**) 12-08-2009, 07:49

Traders I wanted to provide a word of caution. While there are many great systems out there (some free like on this site) it does not absolve you of doing the hard work to ensure the profitablity of that system.

You must still do the backtesting, forward testing and expectancy calcualation before applying any new trading system. While many of you will say, "Of course, what does he think I am, an idiot?" Ask yourself are you really doing it?

I've attached a spreadsheet of a trading model I have been using for a while now. I hesitate to post it because it is not a "free system". But I want you to see the work that goes into testing a system.

This was actually a very easy system to test because it takes only a small number of trades per month. But as you can see is still very effective.

Remember traders, "what we attain to cheaply we asteem to lightly" - Thomas Paine.

Being a trader is hard work. Don't short change yourself by bouncing from system to system. TEST, TEST, TEST!

Here is the spreadsheet attached:

AshFX · #2 (**permalink**) 12-08-2009, 10:04

Quote:

Originally Posted by ForexGuy

Traders I wanted to provide a word of caution. While there are many great systems out there (some free like on this site) it does not absolve you of doing the hard work to ensure the profitablity of that system.

You must still do the backtesting, forward testing and expectancy calcualation before applying any new trading system. While many of you will say, "Of course, what does he think I am, an idiot?" Ask yourself are you really doing it?

I've attached a spreadsheet of a trading model I have been using for a while now. I hesitate to post it because it is not a "free system". But I want you to see the work that goes into testing a system.

This was actually a very easy system to test because it takes only a small number of trades per month. But as you can see is still very effective.

Remember traders, "what we attain to cheaply we asteem to lightly" - Thomas Paine.

Being a trader is hard work. Don't short change yourself by bouncing from system to system. TEST, TEST, TEST!

Here is the spreadsheet attached:

Couldn't have said it better myself.

hradar · #3 (**permalink**) 14-08-2009, 11:03

Which version of Microsoft Office is this file??

austin · #4 (**permalink**) 14-08-2009, 11:36

Also, remember that it's pretty trivial to come up with a system that is profitable on a back test, and that the system can conform to whatever max draw down / sharpe / etc / parameters you so desire.

It's even relatively easy to come up with a system that is profitable on a forward basis as well.

The real trick isn't creating the right system, but rather it is using the right system.

harith · #5 (**permalink**) 14-08-2009, 11:50

how does this xle work ????
does it work at platform >> or >> how i can make it work ???
thank you

Stroopster · #6 (**permalink**) 15-08-2009, 05:34

Hi Forex Guy
could you explain the header line on the spreadsheet...most of it is simple but things like ATR I am not sure of. Certainly looks good.

ForexGuy · #7 (**permalink**) 15-08-2009, 10:59

Quote:

Originally Posted by austin

The real trick isn't creating the right system, but rather it is using the right system.

I don't even understand what that means. Doing the backtesting and forward testing ensures two very important things.

1. The system (under whatever parameters) is profitable if followed. The sample size must be large enough to cover a variety of different market conditions, and the rules of the system must be clearly stated.

2. Serves in building confidence in the model or system. By doing the testing of the model you will gain confidence in its performance and will increase your odds of following the rules as you laid them out.

To suggest there is no value in backtesting shows a great lack of trading maturity.