I opened a new demo account to test my manual system, originally I was testing my EA, had two tiny losses but since I began with my manual system I have been rolling in pips. I risk just under 1% of my Demo account, the account is Euro 3k and I risk about 25 euro a trade.
Initially I took small profits, but recently I believed in the system enough to let it ride to 30+ euro profits or 50+ pips.
I have done 16 trades manually and I think once I have done 100 that Ill then risk real money again.
Here is the myfxbook link: TraderSan
You can also add me to twitter @Flocktrader where myfxbook will tweet my orders as I place them.
Don’t count just the winning trades.
If I told you I had a 1000 winning trades in a year, and I would charge you $100 bucks to get access to the next 1000 winning trades would you do it?
Look at your win ratio.
You will lose trades. You have to lose trades. That’s just how it works. Trade enough and look to see what your win ratio is and that will give you a good indication of how solid your strategy is for the time being. Keep tracking that win ratio, because when the market changes, you want to be able to adapt.
so far its 100% win rate… will keep testing, but at what point do you decide you have tested enough to go live? assume 100 trades and you win 80 lose 20, or do you think 1000 trades are better proof a system works?
ill chip in a bit, a good starting sample for something like this would be 3000-5000. To really get a measure you would need 10,000 or more. Understand that 100+ trades could be considered statistical variance that could be evened out or completely reversed at a later point. If you backtest the same as I am doing with my system and are comfortable with the results you get over many trades then go ahead and build a money management scheme around your results
Backtesting is never a true test to the market. Forwarding testing is. Backtesting can give you an idea if a methodology is viable, but there are plenty of backtested strategies that look great but fail moving forward.
When I was learning to trade I preferred manual backtesting. I think you get a better feel for a system, and you can spot things you might otherwise miss. Plus, it’s a great way to practice trading that system. Having said all that, I used backtesting to determine whether a system was worth forward testing ie. trading on demo. I wouldn’t advise live trading based solely on backtesting.