Testing Gives You Emotional Strength for the Fu*$#*g Hard Times
Once you’ve learned enough about trading systems to pick one that you like, the most important thing you can do to deepen your belief in the system is to back-test it against various sets of historical data for various markets.
If you do a good job of testing, (press a button and go to sleep) so that you know that your system is strong and robust enough to survive (and be profitable) in a wide variety of past market situations (credit-crunch for example), then you will have more belief in it’s behavior and abilities in future markets, during Fu*$#*g horrendous and probable draw downs.
Categories: Backtesting