How to Backtest

How to BacktestLesson 4 of 94 min read

Judge it live

What a pass over past data can and cannot tell you, the test that produces a record worth reading, and what to do with the numbers each one gives.

The drill is worth the hour. It is worth being clear about what the hour buys.

What a past pass tells you

It tells you whether you can find your setup and mark it correctly. That is recognition, and recognition is the skill the drill exists to build.

A past pass measures recognition.

What it does not tell you

It does not tell you how you trade. Nothing about clicking on a chart you have already scrolled past resembles clicking with money on the line and the candle still moving.

A number produced on past data is not your record.

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