Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I am wondering if there is a way to test strategies that are based on chart formations. I mean to test formations like head and shoulders, support and resistance etc. Is there a way how to test it automatically with an application? I know that you can test some strategies that are based on indicators (like moving average etc.) by some testing programs and they show you your profit, loss, highest drawdown...
THX
Can you help answer these questions from other members on NexusFi?
For sure, but it's not that easy to do like simple strategies. First you have to quantify swings with the help of a ZigZag indicator or similar. Every swing has an specific length and angle, so you can check if the realtime pattern matches your specific pattern. It the pattern applies you can make your entry in the strategy and manage the trade.
Ok so how do you test your strategies? When you have a new strategy do you papertrade for lets say 6 month to see if it works? I would like to trade at first seasonals with entry based on a chart formation.
Market cycles change too much to trade 'strategies' in my opinion. I assume you mean a strategy is a set of rules akin to 'if this, do that'. A pattern may work for 6 months or however long youve backtested for, then when you start trading it, it no longer works because the cycle has changed.
Personally, I think seasonal's is a good approach to use. Maybe your chart formation should be something as simple as a trend line or support line break with some order flow behind it. Good common sense risk and trade management beat backtesting. A good seasonal has more edge than a head & shoulders or triangle pattern (that only you can see)
