Am I wasting my time backtesting my strat?
- Thread starter DROBBY
- Start date
IMO majority who use it, use it for the opposite reason.
positutely, how long you been at this game?
https://www.elitetrader.com/et/threads/bitcoin-price-thread.315402/page-255#post-5092600
On and off about a year, and I dabbled a little bit at the end of the bitcoin bull run. I also followed a signal group during a summer, this didnt work XD.
But as far as learning TA and really trying to figure it all out seriously. About a year now.
Drobby,
You are definitely on right track on strategy development (btw MA cross over fail in the long run), I will explain my issue with BTC few lines down. The purpose of backtest is to see if strategy has merit. Backtest will always be better than real trades, but think of it as outline not exact repetition.
8H, you need at least 10 years of data for it to have statistical relevant backtest, since each day will only have 3 point to analyze.
You highlighted issues with other assets, let me highlight the biggest with BTC. The issues is Tethers created by BitFinex. Where you and I need to use real hard earned cash to purchase BTC, BitFinex just creates Tethers out of thin air, and is allowed to use them to buy BTC. If Tethers were removed BTC would plummet. Does not mean you can not trade it, but I made a decision to stay away since if I have to use real cash to buy it so should everyone else.
Good luck
You are definitely on right track on strategy development (btw MA cross over fail in the long run), I will explain my issue with BTC few lines down. The purpose of backtest is to see if strategy has merit. Backtest will always be better than real trades, but think of it as outline not exact repetition.
8H, you need at least 10 years of data for it to have statistical relevant backtest, since each day will only have 3 point to analyze.
You highlighted issues with other assets, let me highlight the biggest with BTC. The issues is Tethers created by BitFinex. Where you and I need to use real hard earned cash to purchase BTC, BitFinex just creates Tethers out of thin air, and is allowed to use them to buy BTC. If Tethers were removed BTC would plummet. Does not mean you can not trade it, but I made a decision to stay away since if I have to use real cash to buy it so should everyone else.
Good luck
Which is true, but I monitor BTC constantly and I have a signal on the 12h(close below 21/55/200 ema) where I short the equivalent of my whole balance. BTC can drop down to 1$ and I wont lose any of my balance in $.
Ho and yes crossovers are terrible if you buy and sell when it crosses, especially if you don't apply risk management. But there is a way to make them work if you limit your losses and lock in most of your profit before they cross back the other way. You also have to keep in mind BTC does not go in chop mode for months on end like other assets. So you can milk some profit even when its not moving much.
Past behavior (of the markets) is indicative for future behavior.
Backtesting is to gather evidence WHEN it doesn’t work.
Backtesting is to gather evidence WHEN it does work.
It is all about improving your system. More profits and less losses. Not just about the losses.
To improve a system you need to know why it works sometimes and also why it does not work sometimes. To me it is logical that you try to improve your system, so you need to know WHY something works or not at a specific moment.
Knowledge about good trades can improve your system as well as knowledge about bad trades.
So if you backtest you just watch the losses?
It means that a system that makes 2% a year in winning trades is good for you, because the profits are not important. Losses are.
Funny logic.
Performance is the result of profits minus losses. So profits are an essential element in the development of a system.