Back testing your trading strategy to maximize your profit

4 years ago forexsimulation 0

Forex market is extremely volatile in nature and making consistent profit in the retail trading industry is very hard.If you do some research you will be surprised to see that almost 90% of the traders are losing money. The new traders often think that this is the perfect place to become a rich person within a very short period of time. You have to consider trading as your business. Every businessman has a solid plan to deal with their customers. Similarly, when it comes to Forex market you have to develop a simple trading system. Creating a balanced trading system from the scratch is very hard. You have to understand the basic features of this market. Some of the new trader often expensive trading system to deal with the complex nature of this market.BY using other people trading system you can never make any significant progress. Today we will give you some amazing tips which will help you to create a simple but balanced trading system.

Know the nature of the market

Before you consider trading as your full-time profession, you have to understand the nature of this market. Having access to the retail trading industry doesn’t mean you will be placing random trades to make a profit. Technical and fundamental analysis are the two most important elements which will help you to understand the market movements. The retail traders are more biased with the technical factors of the market. They simply do the technical analysis and try to become a profitable trader. On the contrary, the experienced professionals always do the fundamental analysis to understand the strength of the market trend. Based on these two factors, you have to create a simple trading system to trade the market. Some of you might say that sentiment analysis is the most important thing to become a successful trader. To be honest, sentiment analysis is something that you can never learn by reading books and articles.

Use the demo trading account

Demo accounts are the best way to learn currency trading. Being a new trader you should never trade the market with real money. Some novice traders might say that the demo accounts are not good for the learner as there is no emotional attachment. This is true to a certain extent but if you start trading the market with real money it will be really hard for you to deal with your losing trades. You have to consider the random outcome of this market. In the demo account, you can trade the market as long as you want and easily find your faults. When you demo trade the market start using a trading journal since it is one of the easiest ways to learn to from your trading mistake. When you start to write things down, it will greatly help you to understand the weakness in your trading system.

Use simulators

The recent advancement in technology has made trading extremely easy. You can easily use the Forex simulators to back test your trading system. Those who don’t have the access to such software can also use the built-in strategy tester of their trading platform. Learning the art of currency trading is really easy. When you use the strategy tester, make sure you are working with a long period of time frame. The more sample data you will take, the better result you will get. Based on your test result you have to find your trading faults. Make some positive change to your trading system and again back test your trading strategy.

Start trading the live market

You also need to trade the market with your real account to assess its actual performance. But when you do so, make sure you are trading with a very small lot. You have to understand the fact that you are not trading the make profit. You are just testing the system in the real trading environment.