Does backtesting work? - Page 2
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Thread: Does backtesting work?

  1. #11
    Take time to read this if you would like a true response.

    One of the hardest things that new traders need to grasp about the charts They're seeing is that: the sole information each candle retains in its database is:The candle Open price. The candle High price. The candle Low price. The candle Close price. Date and time opens.
    That's it people. Now think of the things which are vital to a viewing the likely results of trading which is not held in every candle's database:the spread. Think about this for a couple seconds, people. By default, CrapT4's Crapergy Tester utilizes the current spread. Ouch. If you are 'paper testing' by manually moving back on the charts, you probably won't even bother to add any type of spread calculation. Backtesting at crapergy tester ignores the spread at the time the trade would have been taken since it has no record of it. Consider this:If the trade was taken at the time a major news event premiered and the spread jumped by a factor of 10, this will not appear in your backtested trade outcome. Spreads expand at the weekend, sometimes by a factor of 20 or more. Imagine what that does to EA craptesting results. EA's craptesting their results utilize the current spread. This changes all of the time. Results that are unique will be given by A run at different times. Swap costs. I am not sure that Crapergy Tester factors this in at all when craptesting an EA. For sure, it might take a really dedied paper trader to factor them, even though he/she knows what they were. Just imagine the difference that this makes into the headline profit/loss.
    Have a fast consider the impliions of a candle only holding the OHLC in its database, on looking back to find out what indiors are showing you. They are working with each and every candle's closing price. Ok, so they may be working with their receptive price, or any combination of HL, but the significant thing to remember is that; what an indior reveals you onto a chart is a predetermined point in time, that's the candle close moment.

    Require an indi that we are all comfortable with - Stochastic. The damn thing may have piled up and down like an elevator on drugs throughout the course of a candle and also performed merry Hell with your trading. This will not appear on your chart because Stoch can simply work the candle close price. Imagine what this does to an EA which depends on Stoch to trigger trade opening and closure.

    So, should you run your own Crapergy Tester in visual every tick manner, where do all those ticks come out of? Suppose you are craptesting an EA on the H1. You will notice the Using M1, Using M5 etc messages. Crapergy Tester is carrying the OHLC of every candle it has in its own database and constructing a grid of ticks based on the management these candles required. It's guesswork.

    Fine/ish if you are testing a long term egy that merely makes trading decisions at the close of every candle. Bit of a sod if you are craptesting an M5 scalping system. Absolute sod if your long term trading includes a tracking stop.

    And then we reach the problem of missing candles. CrapT4 ships using incomplete candle OHLC information, let alone missing tick-by-tick data. Noobs don't tend to understand this.

    So guys, this is the reason why back testing is informally prohibited at SHF and why trying to talk it will get you to trouble an any of my threads, and many that I only donate to.

    I use it to test which EA code is working. I would never even bother to have nightmares about using it to test an EA's potential profitability - .

  2. #12
    Quote Originally Posted by ;
    quote Always curious to see about somebody who continues to utilize a trading platform that he thinks is crap when a lot of others are available. Very curious. Surfac - You can read my response to a similar question here : https://www.nigeriaforextrading.com/...ghts-book.html Remember, you are trying to simulate https://www.nigeriaforextrading.com/...art-store.html. There are lots of facets that Strategy Tester in https://www.nigeriaforextrading.com/...ear-diary.html...
    you may google Steve Hopwood (that somebody) and read about him on fourum.

    Https://www.nigeriaforextrading.com/...-vttrader.html itself is not a crap, but backtesting is a crap.

    As FeruFX stated
    Quote Originally Posted by ;
    backtesting ought to be used simply to affirm that the stretegy is trading as per the rules ... Never to look at its profitability.

  3. #13
    Quote Originally Posted by ;
    quote Backtesting ought to be used simply to confirm that the stretegy is trading according to the rules ... Never to check its profitability.
    Depends on the backtesting facility and how near you can set this up to mimic actual trading state, backtesting can show the egy's profitability as well as its validity.

  4. #14
    Hello, Surfac

    I'm impressed you have assembled an ea that works, that is well outside of my scope.

    You have been given lots of good advice here. Simply because the ea doesn't trade as well reside, don't ditch it. The backtest should only be part of the process to make a strong dwell egy.

    The key today will be to work out in what conditions it isn't trading well and if the win/loss ratio and return to risk is realistic. Most systems don't work in most market conditions. By way of instance, it may work well in the euro session and not in the oriental session.

    If you ask for some help, I am certain that somebody will give you some help.

    MT

  5. #15
    Quote Originally Posted by ;
    MT4 itself isn't a crap, backtesting is a crap.
    Then why do you call it CrapT4?

  6. #16

  7. #17
    I am making my own robot ( profitable in real too) and I can resolve you doubts.

    Backtesting is useful for understand how you robot will run ( if you utilize visual backtest ). However, you can't get profit amounts. And why many robots profitable in backtest neglect in real is easy. Normally robots are created trying rules. That means you normally work with open/close candle worth. And that's great before you test demo and you find this:

    1) Inside candle movements affects much indiors used for filter and also can provide signal inside candle performing your robot close/open trades.
    2) Even if you wait open/close moment, many times in that instant, indiors are in a border limit and may show other condition (distinct to posterior ticks ), producing same imitation signals like inside candle movements.
    3) Even if two points I said you are not problem, you've got others things can impact robot (disperse, etc ).
    4) Even if all things are right, you've got the large issue. Rules robot are extremely simple for control all of your possibilities.

    Can you've got profitable and consistent robot? . Yes, but you will need have very good mix of filters ( indiors ) to do occupation fine. And that's the most complie task. My experience say you will need restrict robot to entry in the best cases because of him. And many situations this means you will do little cash because robot simply have a few best cases.

  8. #18
    Quote Originally Posted by ;
    quote Determined by the backtesting facility and how close you can set it up to mimic real trading state, backtesting can show the egy's profitability as well as its validity.
    Bullshit!

  9. #19
    Quote Originally Posted by ;
    quote Then why do you call it CrapT4?
    Alright. Hope you will understand everything.

    The material above (about why backtesting doesn't operate) was copy/pasted from the Steve Hopwood's forum.

    I PERSONALLY do not feel that MT4 is a crap. MAY BE Steve Hopwood does, but I DO NOT.

    Therefore I tried to make it clear to surfac why Backtesting may not function - from the point of view of experienced trader (which can be Steve) and I am not claiming anything what's written THERE.

  10. #20

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