Lesson 17 – Testing your first 5 pairs/5 years

This is the backtesting software I am using in the tutorial: https://soft4fx.com/software/forex-simulator.php

Now that you put in many back aching hours of back testing and searching the deep web for the best indicators, it is time to settle down and see if you got something.

The first 5 pairs we are to test for our potential algorithm are as follows:

EUR/USD

AUD/NZD

EUR/GBP

AUD/CAD

CHF/JPY

I recommend doing the CHF/JPY first just because there is not a lot of news to avoid. My recommendation since there was no specifics on how many actual years to back test each pair is 5 years each.

You are going to need this link with the list of News to Avoid while backtesting.

This may seem like a lot of work but I think if you really do have a great algorithm the more thorough it is tested, the more confidence you will have, the more confidence you have, the less likely you are to stray from your algorithm rules.

This is important because if you do not test with a lot of attention to details and statistics of your results you are going fail in the future when you start testing with real money since you have built a house without a very good foundation of work.

I know this because I think this is where I went wrong with my first algorithm I decided to go live with and even without thorough forward testing I decided to join a prop firm…. yea…. do not do what I did.

If you are still not at the point of finding good indicators and putting together a good algorithm do not sweat it.

You have to understand the bad indicators and the good indicators when you are back testing, you can see when an indicator sucks just by comparisons and watching it work with the simulation software.

I can guarantee your arsenal of indicators will come together by following some of the links I provided in earlier lessons and the ones already provided on this site.

Update 17.1

This is the backtesting software I am using in the tutorial: https://soft4fx.com/software/forex-simulator.php

My current results of my algorithm for the first five pairs using 5 years of historical data.

First Method

Not bad… but I think I could do better.

I want to modify a couple things in my algorithm and retest everything one more time.

Second Method (used different indicator)

Third Method (changed baseline & and volume settings)

Lesson 17.4 Results – I changed volume settings

Update 17.5 – new baseline, additional indicator w/ 2 different settings tested.

I like 2nd algorithm it has high win rate and low draw down. ( If you noticed my bad years were only -.37% & -.43%. I am going to continue to work with this since I have some ideas on how to make it better.

Update 17.6 Sept. 15th, 2020

17.7 – October 14th, 2020

Volume Indicator Package ( Volume Indicator & Template )

Starting New Adjustments to Algo 17.6 – This time I will leaving the volume indicator alone and adjusting a Confirmation/Exit Indicator.

Hopefully Better Results Posted Below Soon on 17.8 Update.