Best backtesting techniques begin with the ‘3 Step Sniff Test.’ I pulled out a video from our archives that best describes how to do it and why. This is a skill worth learning and will serve you well, now and forever.
Backtesting is one of the most important things you can do to properly build your trader foundation. It is how you achieve the all important ‘proof of concept’ that so many traders neglect to do for themselves. Most traders fail too. Do you think there might be a correlation?
Most traders don’t bother with backtesting because they feel it is too time consuming. It can be, yes. What is far more time consuming though is trying to recover your funds once you have lost them!
The 3 Step Sniff test is used to economize your time first. It lets the creme rise to the top so that when you do backtest, you will be focusing on charts, symbols and strategies that have already shown you that they will win. It is the first step to practicing the best backtesting techniques because it focuses on the importance of YOUR time.
The idea is that if it walks like a duck, talks like a duck and smells like a duck, then it probably isn’t an armadillo. It’s a duck! It is better to spend a little bit of time up front to save you endless time on the back end, trying to recover from losses that you had no understanding or idea would occur to you.
The best backtesting techniques begin with the 3 step sniff test and then, once something jumps out at you and says “hey, I’m a duck,” you will have confidence to begin using the UTA spreadsheet to really flesh out your plan.
The UTA is one of the most important and powerful tools you can use to put yourself in the best position for success at a trader. It is at the center of everything I do and without, I never could have created all my strategies:
The UTA is so important, I give it as a free gift to members of all my premium strategies. You can see videos about it on our YouTube Channel.
Click here learn more about the Spotlight Master Suite, as shown in the above video here