How do you test a trading strategy?

The final step in testing your trading strategy is evaluating the results. Look beyond the profit and loss figures and assess the overall performance. Consider metrics such as drawdowns, win rates, risk-reward ratios, and average trade duration.

Why should you test your trading strategy?

By testing your trading strategy, you gain valuable insights into its performance and reliability. You can identify potential flaws, refine your approach, and make necessary adjustments to maximize profitability. A well-tested strategy gives you the confidence and peace of mind to execute trades with precision.

Should you test a trading strategy on multiple markets?

Multiple testing. It can be helpful to test your strategy on multiple markets or periods to ensure that it is robust and has a consistent track record. But don’t expect a strategy to perform well on all assets. Forex is, for example, very different from stocks. How can I apply technical analysis to evaluate a trading strategy?