Backtesting Question

S

sjain100

Hello All -

I'm new to backtesting. Is it best to backtest my strategies including any indicators or price action strategy I may use on a RANDOM stock I've never traded before. This way, I'm assuming, I won't have any bias on it's direction?? For example, if I've always traded AAPL, I might already know it's bullish direction for the year.

Also what is the advantage of multi-time frame back-testing and should I focus on smaller time frames and look primarily at 1hour or less bars so that I actually see more movement in the day to actually test my strategies??

Thanks in advance.
 
Hello sjain100 and Happy New Year,

sjain100 said:
I'm new to backtesting. Is it best to backtest my strategies including any indicators or price action strategy I may use on a RANDOM stock I've never traded before. This way, I'm assuming, I won't have any bias on it's direction?? For example, if I've always traded AAPL, I might already know it's bullish direction for the year.
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Are you manually backtesting or using a computer software to back test?
Are you a day trader (trades close end of day) or swing trader (hold trades for longer days)?

If manual back testing and you are a day trader, I would recommend backtesting your strategy on APPL first, then you can test the strategy on other stock as a strategy robustness criteria.

If you are a day trader pick some time in history (maybe even this year) where market conditions was bullish, bearish, range, and choppy.

sjain100 said:
Also what is the advantage of multi-time frame back-testing and should I focus on smaller time frames and look primarily at 1hour or less bars so that I actually see more movement in the day to actually test my strategies??
More...

Hopefully others can help answering this questions too.

I think this depends on if you are day trading or swing trading. If day trading, time frame less then 60 minutes would suffice so you can look for an edge and trading opportunists per day.
 
Last edited:
Thanks for the response. I'm using Thinkorswim trading platform to backtest. Simulated trading and back-testing is possible and excellent with this platform. I'm a swing trader who holds for longer days.
 
sjain100 said:
Thanks for the response. I'm using Thinkorswim trading platform to backtest. Simulated trading and back-testing is possible and excellent with this platform. I'm a swing trader who holds for longer days.
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Hello sjain100,

I am in the same boat as you, searching for an profitable robust intraday trading strategy. I use NinjaTrader to program strategies. I used ThinkorSwim when I manually trading. It is an awesome platform to trade with.

If you are holding trades for longer days, I think 60 min charts and up is a good start searching for an profitable robust strategy with about 200 trades that cover different market conditions. By testing different market conditions, you have an idea how the strategy will perform per market conditions.
 
sjain100 said:
Thanks in advance.
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I'll save you a few thousand hours with the following:

1. Focus on one or two instruments. Get to know them. Understand why they move, when, and how.
2. You won't find success just throwing indicators at a list of stocks. A waste of your time.
3. You must have a logic to your trading. If you can't describe what you are doing and why in one sentence, then you are on the wrong track. Think, think, think.
4. Plan on a few thousand hours of work before you spend a penny.

Good luck.
 
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