WHAT'S WORSE? ... trading a bad system that you thought was good? ... or not trading a good system because you thought it was bad?
System |
Backtesting Method |
Backtested Return per Year |
System A
(Breakout System) |
Typical Method Used
|
40% |
Market Testing Wizards |
26% |
System B
(Momentum System)
|
Typical Method Used |
11% |
Market Testing Wizards |
24% |
Serious traders backtest because they want to know what really works, or at least, has worked in the past. And yes, past results may not represent future performance. But wouldn't you rather start your trading journey by knowing what you're doing has worked in the past versus knowing nothing at all? In addition, many argue that knowing what doesn't work is equally valuable. Remember, more and more professional money managers are using backtesting to find out what to buy and sell (as well as when!). Why wouldn't you?
