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When do u trust a strategy?

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May 25, 2012 02:40 pm
CFXsignals User

Envois: 359
Membre depuis: 21/05/2012

Unfortunately you need to test strategies all the time - even when they are successful - constant demo trading even when you are trading live keeps your strategy up to date.  I would say a strategy needs to be backtested over 2 years at least, and forward tested at least 6 months with a demo before you use it live.  A lot of people have successful 3 month accounts - this is usually because their strategy fits the market profile at the time (which for whatever reason normally lasts 2-4 months per phase).  Any longer than this, these super profitable strategies just fall apart.  So testing over 6 months with consistently profitable months, with minimum drawdown would be reliable.

Backtesting unfortunately has quite a lot of bias, as I find I move my entries 1-2 pips slightly to favour my system (cheating) because I don't want my work to go to waste - unfortunately the market is not so kind.  Demo trading is good, but you need to manage it with proper SL, maximum drawdowns set, and rules followed.  If you do not follow your rules for 6 months, then add another month until you are a machine at trading demo.  Then move into a micro account for 6 months, then a mini account for 6 months, then start to trade lots.  At that stage you should have 18-24 months forward testing experience, and your system should have 3-4 years of results which should be reliable.

Jul 07, 2012 03:21 pm

Envois: 194
Membre depuis: 26/04/2012

I only trust my strategy only when i test it on demo account so that i can get some confident that i can use this strategy on real account and be more profitable then i take the risk .

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