Hello Traders and Happy New Year!
I had a great time off and managed to do a decent amount of backtesting during December gathering 19 more trades and a few more weeks of data.
During these 19 trades, I endured a pretty hefty losing streak so keep reading to see how this affected the data!
(Tools I have used this week are featured at the bottom of the blog, including discounts!)
Backtesting Progression
Here’s the stats:
- 126 total trades
- 41.27% strike rate
- 98.60% return
Compare these results to blog #13s stats, you can see a dip in strike rate as well as % return.
This is due to me enduring a pretty horrendous losing streak of 16 trades!
Results measured in R (R = % gained)
On my line chart above you can see the impact this has had on the overall growth and I am still recovering from this drawdown.
In reality though, this is not that big of a deal. Of course imagining being on a losing streak of 16 in a live market is pretty scary and even having these results in backtesting was putting me in a mood!
Remember, with backtesting, I am being as mechanical as possible and I am not filtering any trades so huge losing streaks are to be expected.
After this streak, I analysed all the trades to see which ones are good to avoid/would be an obvious no-trade in a live market and this dropped the losing streak from 16 to 10, which is fine.
Joking aside, this losing streak did make me question a few things and especially how I was mapping my structure so I have decided to map it a bit more aggressively and overall I prefer that style as it keeps things simple for my overthinking brain.
(NOTE: Mapping structure regards to Swing levels, Internal levels, and Fractal levels – you can learn more about this in-depth in the trading course I recommend.)
Apart from that I have changed nothing. I am grateful for this losing streak as not only is it more data for what losing streak I may expect if I stay mechanical, but once my graph overtakes the current peak of Return then the confidence boost for the strategy will be very beneficial to trusting the process in a live market.
Other Thoughts
Whilst I was on holiday, I reflected on these 100+ trades I have tested and every time I spoke about them or simulated scenarios in my head, all I could think was that I needed more data.
Yes 100 trades gets you an idea of how it could perform, but in the grand scheme of things, it’s nowhere near enough.
If I’m being honest, I believe you want 500 tested trades for a really strong foundation of data.
Of course this depends on your strategy because some people scalp for that many in a month, others Swing trade and get a handful in a year but for a day trader, like myself, 500 seems the main goal.
You can combine your live data and your backtesting to make it slightly easier to get to that figure but if we are in this game for the long run (which we are), then 500 backtested trades will definitely give you a solid idea of strategy performance.
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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
- Notion
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!
