Our Mission Is Simple
Our goal is simple…We want to do two things for you! First, We actually want to get you trading the markets successfully so you can take your power back and own your own time!!! Second, and this is an IMPORTANT one…We want to save you from falling victim to the establishment! We want to save you from their predatory type business practices that they have…These guys only have their best interests in mind. How do we know that? Just look at the false promises. Listen to the narrative…It’s truly criminal! We want to be part of the solution to what has been a HUGE problem for ages! Our team is here to offer you a healthy alternative. Something that the public has been asking for. You asked for it and we delivered it…Change is here.

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Back Testing Is Important!
As always, there is no definitive ‘best' technique when it comes to trading within the financial markets. There are definitely a ton of different approaches, with some working better than others. With that being said, to see which market best suits you're personality type and trading type you'll want to do some back testing. Truthfully, the best back test strategy will depend on your trading personality, overall goals and level of experience. Below are two methods that you could consider using as part of a back testing template
Intraday back testing

A trader interested in day trading​​ can manually back test intraday charts. The simplest back test includes looking at 2-minute or five-minute chart timeframes, with a 15 up as well to show greater intraday strength. You could find prior trades based on that strategy and then add up the profits and losses, which would 
provide an idea of the profit produced that week. You'll want to make sure that you focus on something that has greater upside vs. downside potential. 

Analysts use back testing as a way to test and compare various trading techniques without risking money. Remember, the name of the game is "safe return of capital". Back testing can show you (historically) how safe your capital is.
 The theory is that if their strategy performed poorly in the past, 
it is unlikely to perform well in the future...there is a lot of truth in that statement.

Back testing is one of the most important aspects of developing a trading system. If created and interpreted properly, it can help traders optimize and improve their strategies, find any technical or theoretical flaws, as well as gain confidence in their strategy before applying it to the real world markets. It's what a lot of Wall Street Traders refer to as "edge". What does EDGE mean in trading?
A trading edge defines your technical or strategic advantage in the highly competitive market environment. Traders can establish multiple edges by starting with popular strategies and customizing rules to lower the risk of getting trapped with the emotional crowd.

Back testing works because you can falsify or confirm a trading idea, you can automate all your trading based on the back tests, exploit the law of large numbers, limit behavioral mistakes, and lastly you can save a lot of time in executions. If you're in the camp of automating trade, back testing will also be your first step!

Back testing is definitely not a waste of time!!!

In the image above you can see that I was tracking $DIDI. It was the Top Mover on my scanner so I watched it and waited for a perfect setup. Above is that "perfect setup". At this point I did a play-by-play break down in real time for my team! Know what to do next is the by-product of a lot of back testing and understanding the historical data! 
In the image above you can what the second step in the trade was. I was watching for a retest on a structural level. That are help and popped from there...How did I know? Back testing...and LOTS of it!  
In the image above you can what the bottom line on the trade was. Price action ripped into higher keys levels. Again, how did I know??? Back testing. 
There are several steps to manually back test a trading strategy or model. Back testing requires historical data, which shows past price movements of a particular asset from trading charts. To back test, a trader will typically need several weeks of historical data for strategies where the trades are short-term in nature. Many years of historical data may be required if testing a long-term strategy.

  • Specify which financial market and chart timeframe​ the strategy will be tested on. For example, you need to decide whether you are planning to focus on a single share or currency pair, or a variety of markets, as well as how long you will collect the results for, whether these are recorded over a one-week, one-month, one-year or 10-year historical period. Each choice will provide different results and information.
  • go back in time and look for trades from a year, a month or a week in the past, depending on how far back you wish to look
  • Analyze price charts for entry and exit signals. This can be done until all trades on the chart up to the current time have been located and marked or written down
  • ​To find gross return, record all trades and tally them up. This should include both winning and losing trades
  • ​Get a percentage return over the whole period. Compare the net return to the capital required to make the trades, or your exposure.

The percentage return should give an indication of how successful the strategy is. If the results of a trader’s backtesting strategy are undesirable, or if a trader wanted to check another strategy or variation, you can simply repeat the steps above. A trader may wish to calculate their average risk/reward ratio over all trades to see if the strategy is worth it.

Although backtesting may show how a trading strategy performed in the past, it cannot guarantee a strategy’s future performance. For this reason, backtesting could be a useful tool but it should not be exclusively relied on. Traders can also ‘forward test’ their strategies in live market conditions to see if they work in real time, without basing them purely on historical data

When I started trading I used the backtesting method to see what worked more often than not. I researched different markets, different time frames, how this played out around news ect. Backtesting is, in my opinion, very important, for a few reasons. First, it gives you some historic insight into how this HAVE played out…

which in term should offer some comfort on HOW things could possibly work out in the future. There are no guarantees on anything, but the historical data you’ll come to appreciate should also uncover future probability levels. Second, (i’m not going to keep counting after this) by back testing and understanding historical data you’re offered a theoretical framework on how things might work out in the future. This will allow you to calculate simple things like: how long will it take to double my account? What type of annual returns could I possibly relize? What happens if I use leverage? (which I don’t endorse, but I’m just saying).

The point is backtesting is important if you’re a new(er) trader or if you’re an experienced trader that is interested in a new strategy. Back testing will give you some very interesting data to work with. When It comes to back testing there are a few different ways that you can approach this topic. The first one is you jump into the deepend, solo, and try to figued out what it is you’re looking for…I don;t suggest this because this way of doing things could take ages…like literally, years! 

 The other more effeint way, is to get into a situation where you know what to look for and you have bother guidance and support of a team to help you'
 though this process.

What I personally like to do, in the spirt of backtesting and forward testing, is give my team members a step-by-step breakdown of what I’m looking for in a “perfecr setup”. I host live training sessions twice a week where I focus just on the breakdown of a great trading set up and how I attacked it. That in itself is a form of back testing. Then when The markets are open I give my team a breakdown in
 real-time of what I’m trading, how i’m reading it. 
Typically “why” at this point doesn’t matter. The overall point is, back testing is very important. It should be your real first step as a trader. 

About Author: Julian Lewis

I have been trading for close to 10 years and have been a Trading Performance Coach for the last 7 years! Trading is not as difficult as you may think! We’ve been made to believe that only a small group of hyper intelligent mathematicians and rocket scientists can run Wall Street. That idea could NOT be further from the truth.
My goal is simple…I want to do two things for you! First, I actually want to get you trading the markets successfully so you can take your power back and own your own time!!! Second, and this is an IMPORTANT one…I want to save you from falling victim to the establishment! I want to save you from their predatory type business practices that they have…These guys only have their best interests in mind. How do we know that? Just look at the false promises. Listen to the narrative…It’s truly criminal!
I want to be part of the solution to what has been a HUGE problem for ages! Our team is here to offer you a healthy alternative. Something that the public has been asking for. You asked for it and we delivered it…Change is here.
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