How Many Years Should I Back Test A Web Day Trading Strategy?

I am routinely asked how long one should test an online trading technique. Though there is no simple answer, I'll provide you with a few guidelines.

If you are gonna play the stock market, you ought to know what precisely types of stock are attainable and precisely what it all means!

There are actually a number of factors that you should think about when determining the time scale for back testing your internet day trading strategy:

Trading frequency

How many trades each day does your day trading system produce? It's not important how long you test a day trading strategy; it is important that you obtain enough trades to create statistically valid presumptions.

If your web based day trading program generates three trades each day, for example, 600 trades annually, then a year of testing gives you enough information to create reliable suppositions.

But if your day trading program generates only three trades monthly, for instance, 36 trades per year, then you ought to back test a few years to receive dependable information.

Underlying contract

You have to contemplate the characteristics of the underlying contract. Search the web to see the average daily volume of the e-mini S&P.

It won't make sense to test a day trading system for the e-mini S&P before 1999, as the contract simply didn't exist!

In my opinion, it does not make sense to back test an e-mini trading program before 2002 because at that time, the market was totally different; less liquidity and completely different market participants.

I believe that a dependable testing period for the e-mini S&P are the years 2002 - 2004.

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How Many Years Should I Back Test A Web Day Trading Strategy?
A day trading professional describes the ideal time frame for back testing an online trading system. Please read this article to learn more.

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