How to Back Test Your Strategy Before You Use it on a Live Account.

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

Backtesting a trading strategy is subjecting it to historical or past chart data to see how it performs.

Your aim with strategy backtesting should be to see if it is compatible with different market conditions by subjecting it to how the price moved in the past.

If your trading strategy works with past data, chances are that it is a good strategy that can work on live prices.

Meaning, you can forward test it using live price movements on a demo account to see how it performs as well.

Depending on the outcome, you can conclude whether to use it to trade on your live account or not to use it.

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

When you first formulate a trading strategy for your Olymp Trade account, you never know if it will work or not.

To find out the stakes of winning, you must backtest it.

Imagine a situation where you just formulated a trading strategy and immediately went ahead to trade on your Olymp Trade live account.

You risk losing money trading because you do not know whether the strategy works or not.

So it’s like you are trading without direction because that strategy, which you have not backtested to know if works, might fail and expose your account.

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

If you can imagine the picture of your account wiped out by your own strategy then you can begin to appreciate the value of backtesting before trading.

In this post, I will show you how to backtest your trading strategy before using it on your Olymp Trade live account.

Back Testing before Going Live.

You do not take a new strategy, fresh from formulation, and use it on your Olymp Trade live account.

You must first expose that strategy to past chart data on the Olymp Trade demo account to see how it performs.

Olymp Trade offers a $10,000 free demo account to try and test your strategies under real market conditions risk-free.

So how do you backtest your trading strategy before using it?

There are two types of backtesting:

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.
  • Manual backtesting.
  • Automated backtesting.

A. Manual Back Testing.

If you chose this method, go ahead and follow the instructions listed below to begin backtesting your strategy.

  1. Open the Olymp Trade Trading Platform.

You can use the Olymp Trade Mobile App, Web version, Desktop version or MetaTrader 4.

  1. Log in to the Olymp Trade Demo Account.

Ensure you switch to the Demo account if your chart is on a live account.

  1. Choose the Asset on which to Back Test Your Strategy.

Your strategy may be limited to certain assets or applicable to all assets.

It is through this process of backtesting that you will find out.

Therefore, select which asset you would like to begin your backtesting with and proceed.

  1. Apply all Technical Indicators and Oscillators Useful to Your Strategy.

You will need to apply all trading indicators at this stage.

Applying them after scrolling back to a previous preferred period may return you to the current period.

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

To avoid that inconvenience then, set up all trading indicators at this stage then proceed.

  1. Scroll the Chart to a Previous Preferred Period.

The best period to perform backtesting would not be with recent data.

Performing backtesting of your trading strategy over a recent period may not give you as fair results as you would want.

You want to capture as many different market conditions as possible and backtesting your strategy about 5 to 10 years ago on the chart would be better.

Especially for position trading.

Also Read: – How to Become a Professional Trader without Getting Scammed.

  1. Move the Chart Forward Bar by Bar.

Use the forward button of your device to move the chart forward bar by bar.

You will be doing so in an attempt to identify possible trade setups and signals as defined by your trading strategy.

  1. Execute Imaginary Trade.

As you scroll forwards on the chart, you will enter an imaginary trade when you spot a perfect trade set up and signal for your strategy.

Ensure you have in mind the Stop Loss and Take Profit levels if you are on Forex mode.

  1. Move the Chart Forward Bar by Bar.

After the imaginary trade is executed, move the chart forward to see how the price moves.

The price will have moved in your favor or against you, but it does not matter.

We are just backtesting the strategy, to declare it effective or not.

  1. Record Trade Results of Imaginary Trades.

Ensure you put down the results of the imaginary trades you take.

It is the only way you can take stock of all you have been doing and make a decision of whether the trading strategy is effective or not.

You can record the following on an excel spreadsheet:

  • Date and Time of trade.
  • Stop loss.
  • Take Profit.
  • Entry-level.
  • The risk to reward ratio.
  • Won or lost.
  1. Repeat Cycle.

You will continue moving the chart forward and spotting trade setups, entering imaginary trades, and recording.

Once you are done with that particular asset, switch to another and continue doing the same.

Once you are done, you can analyze your backtesting results from your journal.

You can then declare your trading strategy effective or not, depending on your results and your own criteria.

B. Automated Back Testing.

This kind of backtesting of strategies involves the use of software and bots.

Robots go back in time and analyze how the market has been, but you must first purchase them.

These are only applicable on Olymp Trade MetaTrader 4, because other Olymp Trade platforms may not allow robot trading.

You will plug a robot on your MT4 and then it will perform backtesting and analyze the results for you.

But do we recommend this method of backtesting?

Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

No, we don’t.

You are backtesting your own strategy which you intend to use manually, so manual backtesting is the best.

Manual backtesting may seem tedious and time-consuming.

But you should understand that while backtesting a strategy, you need to feel the market.

The reason you need to feel the market is to get the experience of trading on different market conditions.

This also gives you an edge on the markets, unlike where you just use a software to perform the backtesting task.


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

Start Trading 

Recent Posts


Olymp Trade trendline drawing tool

7 Best Forex Indicators for Serious Traders.

Are you a serious Forex Trader? Then you must have tried looking for the best Forex indicators to use in your trading for the best returns. In this post, I will show you 7 best ....

Trading contests in Olymp Trade

How to Hack And Win Olymp Trade Trading Contests.

What are Olymp Trade Trading Contests? Olymp Trade trading contests are competitions among traders to find out who attains the highest returns over a given period of time. These competitions are organized by the broker, ....

Forex Trading

Top 10 Forex Trading Tips That Work.

Forex trading is one risky activity which when done wrongly, can result in serious losses. Some newbies suffer so significant losses that they vow to never again venture into trading.  Do you also have to ....

Trading view platform

How to Start Trading Forex on TradingView.

What is TradingView? TradingView is a web-based charting platform used to track the prices of different assets. You can track and analyze the prices of currency pairs, stocks, indices, commodities, crypto, and many other assets. ....

Momentum trading

The Basic Guide to Momentum Trading.

What is Momentum Trading? Momentum trading is the buying and selling of assets with respect to the prior strength of the trend. The rationale behind it is that having a strong force behind it, the ....

How to Register Olymp Trade in Nigeria.

How to Register Olymp Trade in Nigeria.

What is Olymp Trade? Olymp Trade is a globally recognized Fixed Time and Forex broker. The broker offers a wide range of assets including currency pairs, indices, ETFs, stocks, commodities, metals and crypto currencies. Amazingly, ....

How to fund Olymp Trade with Bitcoin in Kenya

How to Use Bitcoin to Fund Olymp Trade in Nigeria.

Are you an Olymp Trade Nigerian trader? Do you have a Bitcoin Wallet? Have you been wondering how you can just fund your Olymp Trade trading account directly from your Bitcoin wallet? Well, you do ....

How to Make Money in Olymp Trade India.

Olymp Trade India is a Forex and Fixed Time Trading broker. It  has a wide global coverage and is well regulated for International trading. The broker offers a user-friendly platform which enables you to profit ....

Candlestick patterns

How to Make Money Trading with Candlestick Charts.

Price charts are of different types. There are Area charts, Japanese candlestick charts, Bars charts, and the Heiken Ashi chart. The Japanese candlestick chart is the best understood and commonly used for the analysis of ....

When is the Best Time to Trade Olymp Trade in Nigeria?

When is the Best Time to Trade Olymp Trade in Nigeria?

Olymp Trade Nigeria offers so many tradable assets including currency pairs, crypto, indices, stocks, commodities, ETFs, and metals. While crypto, indices, stocks, commodities, ETFs, and metals can be traded at any time, it is not ....

Intraday trading

How to Make Money Intraday Trading in India.

What is Intraday Trading? Intraday trading is buying and selling assets on the same day before the market closes. It is also referred to as Day Trading because all open trades are closed before the ....

How to trade stocks in Kenya

How to Trade Stocks Online in Kenya.

Stocks are collections of shares of a company. And shares are units of the capital of a company. A company divides its capital into many equal units and sells them to individuals who wish to ....

how to trade ethereum to bitcoin

How to Trade Ethereum in Olymp Trade.

What is Ethereum? Ethereum is a cryptocurrency. And a cryptocurrency is a digital asset designed to work as a medium of exchange where individual coin ownership records are stored in a ledger existing in a form ....

How to Make Money Trading Litecoin in India.

What is Litecoin? Litecoin a cryptocurrency that has gained so much popularity in the recent past. Cryptocurrencies are virtual coins based on the blockchain technology. They have exchange values in terms of the traditional fiat ....

Olymp Trade Indonesia

Olymp Trade Indonesia – How to Get Started.

What is Olymp Trade? Olymp Trade is a Fixed Time and Forex Trading platform operating globally, including within Indonesia. The platform is easy to use, easily downloadable on Windows, iOS, and Android. Still, wondering you ....

Position trading strategies

7 Best Position Trading Strategies to try in 2020.

Are you considering position trading? Position trading is a technique of trading that involves holding trades for such long duration as months or even years. The goal of Position trading is to profit from the ....

Fixed time trade tips (stock trading)

Top Fixed Time Trade Tips for Beginners.

Fixed Time Trading involves placing a trade which is bound to expire after a fixed set duration, hence the name. For example, if a trade duration of 1 minute has been chosen, then you take ....

Breakout trading strategy

How to Make Money Trading Breakouts on Rectangle Patterns

What are Rectangle Patterns? Rectangle Patterns are the consolidation of price movements happening horizontally to form a rectangular shape. Here, prices move up until a certain level is reached, then bounces back downwards to another ....

MACD indicator

How to Trade the Wedge Pattern in Olymp Trade.

What is a Wedge Pattern? A Wedge pattern is a pause in the prevailing trend which appears as the price movement shift from being wide to narrow forming a wedge-like shape. This pattern can appear ....

Best trading hours in Olymp Trade

How to Choose the Best Trading Hours in Olymp Trade

If you’ve been trading FTTs for some time now then, you already know that timing is everything. Be it setting the trade expiry period, or choosing the best trading hours; everything matters. There is no ....

How to Use The ZigZag Indicator on Olymp Trade.

What is the ZigZag Indicator? The ZigZag Indicator is a technical indicator used to analyze the movement of an asset’s price. It shows the SWING HIGHS and SWING LOWS of a market. The ZigZag Indicator ....

The design of the Alligator is based on an assumption that the financial market is non-trending most of the time (80%) and only spends the rest (20%) trending.

How to Trade with the Alligator Indicator on Olymp Trade

What is the Alligator Indicator? The Alligator indicator is a technical analysis tool developed by celebrated trader and chartist Bill Williams. He designed this indicator to improve trader success. The design of the Alligator is ....

Beginners Guide For Trading Profitably in Olymp Trade

Beginners Guide For Trading FTTs in Olymp Trade

Do you want to start making money in Olymp Trade? I’ll help you with the tips for starting out on this post. Just follow the steps outlined below to begin. Register an Olymp Trade account ....

Olymp Trade Neteller deposit

How to Use Neteller to Deposit in Olymp Trade

Last updated on 3/18/2019 – Personally I use the KCB (Quick serve) VISA Card to make Olymp Trade deposits. If you have the card make sure it is enabled for SMS such that when you ....

Olymp Trade Option

Olymp Trade | Tips For Winning on Fixed Time Trades

Here’s the truth: Most Olymp Trade Fixed Time Trades – investors don’t get to earn immediate returns on their short trade investments. Most people lose and end up quitting. In fact, a recent study has shown that only ....

Read More
 
Visit Website.
New to Olymp Trade?
Important!
Review
REGISTER
1 Best Brokers in 2019
  • Register on the platform
  • Complete the interactive tutorial
  • Choose one of the strategies
  • Practice using a demo account
  • Make a deposit and become an expert
Earn real money with your phone.

Comment on this post