Just how reliable is backtesting?

[profitlocker]

IAN

That's correct. Couldn't have said it better. Implementation and proper resource utilization is key. Doesn't matter if you're running a Bloomberg subscription, super data feed, and 20 monitors. A well seasoned trader with IB Data, single monitor, and slowest computer on the block will empty some pockets

 

[kut2k2]

I agree,
Trading is forward-looking...you need vision and foresight and intuition, with a certain degree of logic and rationale behind it;
...I make this judgement call of where or how the market will move or behave...every morning before the market opens

No amount of backtesting or looking or staring at past charts will make a difference in how I make this prediction for the day ahead

http://www.elitetrader.com/et/index.php?posts/4271590/

 

[profitlocker]

I think newer traders should backtest manually so they can see the charts and learn the patterns. Yes, this requires work. I learned the hard way, that you have to work for your money in this business.

 

[profitlocker]

You do that? I would consider that system useless. The system should be adaptive and the only need for substantial modification would happen not more than 3-4 times per year.
Not much changes in 1 day when it comes to the structure of the markets, therefore daily optimization would be unnecessary.

d08

What instruments and timeframes do you trade that allow you to optimize 3-4 times per year? Are you factoring in volatility/ranges?

 

[d08]

@profitlocker equities and ETFs. The idea was to only optimize once per 3-4 years but that's not how it went. Volatility adjustments aren't manual, I adjust what type of signals to take and try to optimize the profit factor in the process.

 

[Fractals 'R Us]

I did a lot of backtesting and got fed up with it all. I take trades now that have a reason for existing, whether price action or news, not just some theoretical matchup with some mathy stuff... I don't do anything that wasn't known and understood decades ago, it's just tech-enhanced. If I found something newer that works I'd employ it but so far, not much. The biggest struggle I have is taking what I see on a chart and breaking it down into terms that a computer can work with! I have a real appreciation for the idea that the best computers on earth are the ones between our ears after all this effort.