I have sort of alluded to or whispered about this process here and there in a variety of posts over the years, but I want to finally put all this information in one place because I feel that this process really is the cornerstone of profitable trading.
This series will outline what I believe is the best way to go from learning a trading strategy (or having a strategy idea), to thoroughly testing it, to finally being have the confidence to take it live. Just to clarify, we are going to be testing discretionary (manual) strategies, not automated ones (EAs, robots, trading programs).
Will this guarantee your success? Of course not. This does take work and like I say in my disclosure, most people will not be willing to put in the time and effort.
But you are not one of those people right?
Even if you do put in the time, you may not be successful right away. What this process does do, is it greatly shifts the odds in your favor, without risking a dime…and that is all you can ask for.
As Professional Trader and Fund Manager Chris Lori mentioned when I interviewed him, tirelessly backtesting strategies was the biggest factor in his success.
My friend Haji took his laptop with him on his 6 month assignments at sea, when he worked on a LNG tanker ship. During that time, he tested the crap out of some trading strategies and as a result, he was able to quit that job to trade full-time and spend more time with his family.
Again, these are not typical results, but the best way to learn something is to model people who are successful at what you want to do. With that, here we go…
Get a strategy to test (there are two ways to go about this)
You can either invent a strategy yourself, or learn it from someone else. If you are not consistently profitable already, then you should probably stick to learning from others.
But there is a catch. You have to learn from people who are doing it for a living.
There is a lot of quality free education out there, but eventually, you will probably have to put out a little money (doesn’t have to be a lot) to get a quality education. This is an important thing to keep in mind.
It is easy to get caught up all the different strategies that are posted on the forums, but remember that you best shot at success is start with a strategy that is already putting food on someone else’s table. Find these people and learn as much as you can from them.
However, if you do feel the need to get creative, the next part of this three part series will allow you to indulge your craziness without losing any money.
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Stay tuned on Monday for the next installment of this series.
Here is a special thanks for reading…
I truly believe in this process I will launching a community dedicated to crushing the hardest step in this process (you will find out what that is on Monday). If you want to get a jump start, check out this page to join the community when it is ready.
This is your opportunity to get in on the ground floor, save a ton of money and get access to a wealth of testing results. Click here for more information and instructions on how to join. It is only for people who are willing to work, but I believe that it can become a huge resource for figuring out what works and what doesn’t.
Disclosure: I am a student and affiliate of Chris Lori, so I do make a commission if you buy from my site. But I promote his work because I believe in it and a portion of the proceeds go to my charity organization. Haji is someone I know personally and get no monetary compensation from him. He is a cool guy who just so happens to be a rockstar trader.
P.S. – If you have 10 seconds to answer 3 simple questions, I would be very grateful if I could get your anonymous opinion on a few things. This will help me give you more information that will help to solve your specific trading issues. Just 3 questions and it will be really quick…promise. Click here to give your opinion. Thanks!