Hello!
I’ve only just discovered this website and this is my first post.
I’ve been going through the babypips school and am very impressed. I’m amazed that it’s free.
I am now up the the “create your own trading system” part.
I’m greatly confused by the stop loss on the example “So Easy It�s Ridiculous” system. They say use a [B]30 pip stop loss[/B] on [B]daily charts[/B].
That stop loss is awfully tight for daily charts. I did a quick back test and I can’t find a single entry where you wouldn’t get stopped out on the first day.
Sure the system seems accurate enough, but you’d be sitting on the side-lines with a 30 pip loss while watching the market take off with out you. Doesn’t sound like much fun.
Does anyone actually trade this system? As is and unmodified?
I have a question here for you, I’ve been encountering with the term “back test” but I don’t know how it’s done, does it help you realize you mistakes when opening a trade or something related to that?
Backtesting is using old data to test a system. You can for example test your system with years worth of data within minutes. I use “Forex Strategy Builder” It’s free software, just Google it.
You can also manually back test by opening up your daily chart and scroll back a few months or years and then click forward one candle at a time until you see a good setup where you would buy. keep clicking forward to see if you would have made or lost pips. Keep in mind that old candles are static candles (they don’t move up and down) in a live market you get whipsaws and can be stopped out easily.
