Is backtesting on software strictly necessary to trade?

[tomorton]

There's no denying the conclusions in the paper that various biases, if not scrupulously weeded out, can undermine validity of testing a theory.

But reporting that changing market dynamics undermine a valid strategy is going too far. If this were true, then no strategy would be valid.

 

[malaguti]

I'm with Tom i think. changing market dynamics is inevitable, and shouldn't rule out the validity of a backtested trading strategy. I have one, backtested over years of data in trends that are up, down, sideways. A strategy can also be dynamic if you want to call it that as it can distinguish market states, which is really quite easy.
I would never have implemented a strategy had it not been backtested and saves countless days. not surprisingly the actual results continue to be just as good as the backtest.
The results of a backtest are only as good as the strategy itself in my opinion.
dismissing the results of something makes no sense at all

 

[dbphoenix]

There's no denying the conclusions in the paper that various biases, if not scrupulously weeded out, can undermine validity of testing a theory.

But reporting that changing market dynamics undermine a valid strategy is going too far. If this were true, then no strategy would be valid.

True. However, the question posed by the OP has to do with whether one should backtest by computer or manually. I doubt that anyone with trading experience would dispute the value of backtesting entirely.

 

[piphoe]

True. However, the question posed by the OP has to do with whether one should backtest by computer or manually. I doubt that anyone with trading experience would dispute the value of backtesting entirely.

didn't you say: "Computerized backtests are for all practical purposes a waste of time and effort as their results are based entirely on hindsight. But you won't be trading in hindsight; you'll be trading in real time.

:innocent:

 

[piphoe]

Computerized backtests are for all practical purposes a waste of time and effort as their results are based entirely on hindsight. But you won't be trading in hindsight; you'll be trading in real time.

Paper trade in real time or delayed or via replay. If you use indicators, you may be surprised how they shift and wiggle in real time.

:|

 

[dbphoenix]

If you're genuinely interested in how I approach backtesting, read this. It's 13p long. Whether or not it is of any interest to the OP is another matter. If he has no response to it, there's no reason to comment further.

 

[piphoe]

right after i quoted you i got aa warning from management...thats all i need to know