Books on backtesting fill a library. Still, we have to start somewhere. We hope the videos below will help. As you’ll see, one way to start is by focusing on a single ingredient of our edge. In this example, that ingredient will be accuracy, and we’ll use this approach of focused simplification to establish if a methodology has any merit at all.
Then we can start measuring and adding other ingredients, e.g. win/loss ratio or trailing rules, etc. to our edge, while keeping the base, accuracy, constant. Which is the topic of the second video.
Welcome to the caffeine-driven part of trading: research and data-crunching!
Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
