So, I have been trading for about 3.5 years now and rapidly getting better and better. Not quite break even or profitable,...YET... but certainly not losing MEGA cash. Basically my system is a MACD type system looking for crossovers of the fastline with the signal line and the 0 line (up = LONG and down = SHORT) and always trading based on 3 different time frames all aligning in the same direction. I am in US and trade mostly stocks and ETFs offered here.
The problem I have had is that my stops are either too close or too far away to allow me to make sufficient $$ on my winners and I end up at other times getting stopped out just before a reversal to skyrocket in the direction I anticipated.
So the dillema I have been working on is reviewing trades and trying to refine it to minimize these issues. I have come up with what SEEMS to be a GREAT refinement. I have "BACK TESTED..." this by starting in 2007 to 2009 almost DAY BY DAY and documenting my "trade" then advancing the chart by 1 day to document what my new stop would have been and where my trade positions would have opened or closed. I figured this was better than using a computer to "back test" as my system is partly a discretionary system based on market sentiment and general fundamental news. Doing this I would have been WILDLY successful with my new refinement. I realize that 2007-2009 was a strong DOWNTREND so I chose 2004-2005 where the market was quite choppy and flat and repeated the process. Here I was less succesful (as expected) but I still would have beat the market.
In the past I have just traded each new refinement. I won or lost money over about 30 -50 trades before I would make any decisions on if my refinement was worth a damn. However, I think this method described above would have worked better.
BOTTOM LINE: HOW DO YOU GUYS "BACKTEST A SYSTEM REFINEMENT"?? ANY BETTER IDEAS
Thanks for your input...
The problem I have had is that my stops are either too close or too far away to allow me to make sufficient $$ on my winners and I end up at other times getting stopped out just before a reversal to skyrocket in the direction I anticipated.
So the dillema I have been working on is reviewing trades and trying to refine it to minimize these issues. I have come up with what SEEMS to be a GREAT refinement. I have "BACK TESTED..." this by starting in 2007 to 2009 almost DAY BY DAY and documenting my "trade" then advancing the chart by 1 day to document what my new stop would have been and where my trade positions would have opened or closed. I figured this was better than using a computer to "back test" as my system is partly a discretionary system based on market sentiment and general fundamental news. Doing this I would have been WILDLY successful with my new refinement. I realize that 2007-2009 was a strong DOWNTREND so I chose 2004-2005 where the market was quite choppy and flat and repeated the process. Here I was less succesful (as expected) but I still would have beat the market.
In the past I have just traded each new refinement. I won or lost money over about 30 -50 trades before I would make any decisions on if my refinement was worth a damn. However, I think this method described above would have worked better.
BOTTOM LINE: HOW DO YOU GUYS "BACKTEST A SYSTEM REFINEMENT"?? ANY BETTER IDEAS
Thanks for your input...
