Testing A Strategy
Before implementing a strategy in a real account, it is key to test it out extensively and know it back to back. The last thing a trader has to face is doubt of his own strategy when emotions are added and the possibility of losing money is on the table. Therefore, live accounts should only be used to trade strategies that are well tested. How can a trader test his/her strategy effectively?
Booking Every Trade
Traders should not only book the trades that they make in the live account but also those that they make in demo accounts as well. This will give a well-detailed picture of how a strategy performs both in the demo account as well as in the real account.
Big Sample Space
A big sample is very important when testing out a trade. When testing out a strategy there should be as many trades as possible that are taken for samples. Any number over 200 can give a clear picture of the true traits of a strategy.
The replay mode is one of the best ways to test out strategies that want to be implemented on higher time frames. I mean how else would you be able to test a strategy that operates in a weekly and daily timeframe only in a short space of time. The answer is in front of you. Replay mode. This however is only available on tradingview and not on metatrader so you will have to use the former for this exercise.
The psychology of a trader is very important to his/her success as a trader. If anything it is actually the most important thing to a trader. There are a couple of ways to test and train one’s psychology and one of them is through increasing leverage gradually. This allows a trader to process the whole change from lower pip to dollar ratios to higher ones.