A lot of traders spend their whole weekend backtesting
And still show up on Monday with nothing to show for it
Not because they didn't put in the hours
Because they backtest the wrong way
Here's how to do it right ⤵️
1. Write your rules down before you open a single chart
If a rule can't be written down, you're not testing it, you're guessing
2. Test every setup, not just the pretty ones
Skipping the ugly ones is how you fool yourself
They're where the real results are
3. Don't test on the same charts you built your rules on
Build your rules on one period
Then test them on a period you haven't looked at
If it only works on the first one, it doesn't work
4. Look at the trades, not just the numbers
Pull up 10 of them and ask: would I actually take this ?
I did exactly this on almost 4 years of data recently
It humbled me, and it made my model better !!
Backtesting isn't about proving your model works
It's about finding out where it DOESN'T
Save this for your weekend study 📚