Hello Traders!
Back to the backtesting grind for me! It was hard to get the ball rolling again but as the week progressed I made some good progress.
I made a great way of being able to track and cross-reference your data as well as some useful tips you can incorporate into you data gathering, so make sure to follow along!
(Tools I have used this week are featured at the bottom of the blog, including discounts!)
Backtesting Progression
Since the last time I updated you with my backtesting results, here’s what I have done:
I have gone through Feb 2025 a bit more, reviewed a lot of my trades to see if they are valid, finished testing April 2023, started testing for May 2023.
There were a few invalid trades in my data and it was painful having to remove a few winners but I also found valid trades that I had missed so there’s not been a huge change in the data.
As for my goal for having 100 trades tested, I am now closer than ever at 96 trades!
Here’s how the data is looking now:
Results measured in R (R = % gained).
The current stats are:
- 96 total trades
- 44.79% strike rate
- 89.90% return
As you can see, this is an expected strike rate for a 1:3 risk-reward ratio and is very much in the realm of profitability.
Some of you may be familiar with the image below, but for those who aren’t, it’s a table that shows risk-reward vs win rate %
With the data I have gathered for my strategy (using the framework taught from the course I recommend), I sit pretty comfortably within the area of probability.
Of course I can go even further and improve my win rate by not taking the stupid ‘low probability’ trades, but to be able to just get on the charts and still execute these low probability trades and still be profitable in the long run is just crazy, and makes trading easier for me.
How do I define a low probability trade?
This is something that will take a bit of time to figure out for your strategy but to make it simple and mechanical in the beginning, is to check it against your confluences.
Here’s a quick framework for you:
High probability
More positive confluences than negatives
Medium probability
Equal or near to equal positive and negative confluences.
Low probability
More negative confluences than positives.
As you understand your system and the power of certain confluences, then you can refine it but this should see you through to getting to grips and first data gathering for your system.
Tracking and Cross-referencing Data
I’ve made a search code for my backtesting data for each trade. This is so I can easily search and cross-reference any correlation for certain confluences and the trade winning or losing.
As I include a sentence to describe each trade, to keep things consistent, if I add in this code then it won’t matter what I write, so long as I put in the important code for later.
Here’s 2 examples of of my codes:
[T2] [P15OF]
[T2] = Taking a trade when already in a trade
[P15OF] = Pro M15 order flow
I haven’t gone crazy with coding everything and I have only done a handful for which I believe there to be useful information.
I’ve done this for around 40 or so of my trades and so far it’s been extremely useful but I am yet to cross-reference them to see if any have an edge, but this is a long term thing and I won’t use it until I have a very large sample size of ideally 200 tested trades (because you can cross-reference and see if there’s an edge but you’d need a load of trades to prove there is an edge with that code, not every trade has the same code).
Key Takeaway for the Week
Just keep gathering data but make sure you stay on track.
It’s so easy to get carried away and start adding random things into your testing to see if there’s an edge but when you come back to review that data it will be very confusing.
Keep it simple, your future self will thank you.
NOTE: I am trying a different blogging style for the backtesting series now and this is the first iteration of that, I hope you enjoyed it!
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As promised, here are the tools I have used this week:
- FXReplay (for 15% off monthly plans, use code: MTRFX15, for 7% off yearly plans, use code: MTRFX7)
- Recommended course
Check out the tools page for more info
Thank you for taking the time to read this blog post, it means a lot to me.
See you next week and happy trading!
