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Hey hey, what’s up my friend! Let me ask you… Does your trading strategy work? You might be thinking: “Of course, Rayner, I made money on my last 3 trades!” Here’s the thing: 3 winning trades don’t mean your strategy works. You could simply be lucky. It’s like flipping a coin 3 times and getting 3 heads. Does that mean the next flip will be heads? Of course not. (It's statistically meaningless. It's the trading equivalent of your mum telling you you're handsome. Appreciate the support, but don't go modelling.) The same applies to trading. Just because a strategy made money over a few trades doesn’t mean it has an edge in the markets. So how do you know if a trading strategy actually works? Backtesting. This means you take a set of trading rules and test it across years of historical data. Instead of judging your strategy based on 3, 5, or 10 trades (which tells you nothing), you test it over hundreds of trades across different market conditions. Bull markets. Bear markets. Recessions. Now you have something real to work with. Actual data. And this is something 99% of traders don’t do. Instead, they learn a new trading strategy, make money on a few trades, get excited, and think they’ve found the holy grail. Then, when the strategy starts losing, they abandon it and look for the next one. Sounds familiar? So if you want to learn how to validate a trading strategy before risking your hard-earned money, then join me at my upcoming live event, Stock Trading Secrets During this free 2-hour training, you’ll discover:
Interested? Cheers, Rayner “host-of-STS” Teo P.S. Backtesting is like knowing your partner’s dating history. The more you know, the fewer nasty surprises later. Same with a trading strategy. You want to know how it behaved in the past before you commit to it. |