Does it begin to become slightly counter productive to accommodate trends from more than 5 years ago?
Thanks for your thoughts
Does it begin to become slightly counter productive to accommodate trends from more than 5 years ago?
Thanks for your thoughts
I make backtest from 2005-2007, so for me, the last 5 years are a short period. Regards Greg
Thanks Greg, presumably you are using a higher timeframe for your trades?
Yes, I am using H1 time frame
This is a great question.
And this is only my opinion. I do not have much experience. I started trading in 1987.
I used to want to backtest for about 20 years. More recently (the last two years in particular), I have come to the conclusion that anyone who believes that there is a single strategy that can be used to make money regardless of whether you believe the market is bullish, bearish or ranging, then it is logical to pursue nirvana and go back to where records began. We’re talking about at least to the 1980s.
My belief systems are now along the lines that there is no strategy that can work in any market. Long story short (because I tend to write books on here), I now try not to look backwards longer than two years at the most. It’s fair to say that regardless of the pair (or index, commodity, or any other underlying instrument) I don’t think I have yet observed a market to be long, or short, or ranging for that long a period.
So right now, I am concentrating on a ranging strategy and backtesting model specifically for Crypto, that has changed from one assuming a bull market from April 2020 to 1st week of Jan2022. My belief system tells me it has changed from bull to ranging (not yet to bear despite the historical evidence of the four year halving cycle with everyone expecting a bear market for the next 3 years). So my Crypto plan has this lack of certainty as the biggest risk identified this year, and my formal 2022/2023 business plan that I am now finalizing effective 1Apr22 to align with UK tax year has changed my plans to rely less on HODL, and more on trading, income generation and esoterics (eg NFTs, DeFi, DAO and DAC).
On the Forex side, I am not currently trading, and especially since the Russian invasion of Ukraine, that news alone is sufficient to justify my absence from Forex. Don’t get me wrong, I continue to invest time in back testing Forex, but it is about the lowest activity on my list of investment and trading pursuits, which take up between 10% and 25% of my weekly effort. I spend far more time these days on those newer pursuits, feel guilty that I have not yet finalized the drill down documentation of my change of direction since Jan22, but that guilt is soon taken away when I see one of my portfolio components double its value in 3 months and use my trading plan to dispose of a portion of it that means that component of our portfolio has actually cost me a net of -$7, and I can now comfortably leave the remainder without a care whether it tanks to zero or does a 100X.
I like to backtest at least five years.