How to back test a winning strategy
The key to back testing is all about the historical date. Although past data is not a guarantee for future results, it sure is a key to some level of success. In order for me to develop a strategy, I took 10 years worth of data and dissected it. The process was very long. However I found a winning strategy. I did my backtesting manually. There are stock software programs which will make the process a bit easier.
The trades that I have done each day, I back test during the night. I go over what worked well or what did not work and WHY. I look at the time frames in which I based my analysis on and the proceeding areas of support and resistance. I then narrow in on the daily chart and do the same thing but on a smaller time frame. This process is done daily.
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