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Back Testing Trading Results
There are two means of back testing trading results. One is to look at results and the other is to look at process. Auditing results is obvious. Traders will keep track of all stock trading, commodities trading, options trading, and futures trading. The result will be a list of trades that were profitable and a list of trades that were not. However, aside from knowing where the trader made of lost money, a results audit is not very useful. A process audit will show stock traders, commodities traders, the options trader, and futures traders where the problems lie in back testing trading results. A process audit is when the trader goes back and examines whether he or she is managing trading practices efficiently and effectively. A process audit is not just following a path from trade to trade. It is a critical look at each step in choosing which stock market, options markets, commodities markets, and futures markets to trade, and which equity or derivative contracts to trade. It is a step by step comparison of trading practices versus trading strategy. Back testing trading results by means of a process audit will help the trader perfect his or her use of technical analysis tools such as Candlestick pattern formations in order to increase trading profits.
The key features or steps in using a process audit for back testing trading results are as follows: Goal, process, result, review, and improvement. The obvious goal is to make money and reduce investment risk by finding profitable trading opportunities. When the trader has found these opportunities he or she will want to attack the job of trading with a well through out strategy, keep track of results, and modify strategy or execution as needed. Back testing trading results comes down to task definition, objective definition, and a tally of results. What procedures are necessary and in what sequence? What knowledge base is needed and how much practice is necessary? In the end, effective management of trading practices leads to intended results. In the end there can be a fair amount of “homework” involved in successful trading. However, the trader who does his or her “homework” is in good company. Rice traders in ancient Japan developed Candlestick chart analysis and Candlestick trading tactics. This took years of patient observation and recording of trading results. Today’s trader has the advantage of a ready made system for technical analysis of price movement. The job of today’s trader is to learn the process of trading stocks, trading commodities, trading futures or trading options. For example, if he or she is new at trading options a course such as options training with Stephen Bigelow can be an excellent choice.
2. There are two means of
back testing trading
results. One is to look at
results and the other is to
look at process. Auditing
results is obvious.
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3. Traders will keep track
of all stock
trading, commodities
trading, options trading,
and futures trading.
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4. The result will be a
list of trades that
were profitable and a
list of trades that
were not.
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5. However, aside from
knowing where the
trader made of lost
money, a results audit
is not very useful.
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6. A process audit will
show stock
traders, commodities traders,
the options trader, and
futures traders where the
problems lie in back testing
trading results.
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7. A process audit is when
the trader goes back and
examines whether he or
she is managing trading
practices efficiently and
effectively.
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8. A process audit is not just
following a path from trade to
trade. It is a critical look at
each step in choosing
which stock market, options
markets, commodities
markets,
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9. and futures markets to trade,
and which equity orderivative
contracts to trade. It is a step
by step comparison of trading
practices versustrading
strategy.
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10. Back testing trading results
by means of a process audit
will help the trader perfect his
or her use of technical
analysis tools such
as Candlestick pattern
formations in order to
increase trading profits.
www.candlestickforums.com
11. The key features or
steps in using a
process audit for back
testing trading results
are as follows:
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12. Goal, process, result, review,
and improvement. The
obvious goal is to make
money and reduce
investment risk by finding
profitable trading
opportunities.
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13. When the trader
has found these
opportunities he or
she will
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14. want to attack the job of
trading with a well through
out strategy, keep track of
results, and modify
strategy or execution as
needed.
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15. Back testing trading
results comes down to
task definition, objective
definition, and a tally of
results.
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16. What procedures are
necessary and in what
sequence? What
knowledge base is
needed and how much
practice is necessary?
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17. In the end, effective
management of
trading practices
leads to intended
results.
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18. In the end there can be
a fair amount of
“homework” involved in
successful trading.
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19. However, the trader
who does his or her
“homework” is in good
company.
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20. Rice traders in ancient
Japan
developed Candlestick
chart
analysis and Candlestick
trading tactics.
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21. This took years of
patient observation and
recording of trading
results.
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22. Today’s trader has the
advantage of a ready
made system for technical
analysis of price
movement.
www.candlestickforums.com
23. The job of today’s trader
is to learn the process
of trading stocks, trading
commodities, trading
futures or trading options.
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24. For example, if he or she
is new at trading options a
course such as options
training with Stephen
Bigelow can be an
excellent choice.
www.candlestickforums.com
25. Routinely back testing
trading results will help
the trader reverse losses
and improve gains in
the equity market where
he or she chooses to
trade.
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26. Repeated review of
trading process will help
the trader get rid of the
eternal bugaboos of the
trader, fear and greed.
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27. The psychology of
trading can defeat the
best laid plans and
practiced procedures.
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28. A frequent and honest
review of what you are
doing and why can lead to
steady improvement in
trading results.
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