How to Backtest a Trading Strategy – 4hr Outside Bar Part 1

New Series

 

I have decided to create a new video series in which I give you an over-the-shoulder look at how I backtest and improve mechanical trading strategies.

In this first video I begin to code and test a free trading strategy found on the Forex Factory forum.   It’s a strategy for trading Forex on a 4 hr timeframe.

The Rules:

Long Trades:

  • The setup bar has to be above the 30 period EMA on the 4hr chart
  • The setup bar has to be an Outside Bar
  • The setup bar has to close above the open
  • If all conditions are met then buy the next bar at the open

Short Trades:

  • The setup bar has to be below the 30 period EMA on the 4hr chart
  • The setup bar has to be an Outside Bar
  • The setup bar has to close below the open
  • If all conditions are met then sell short the next bar at the open

Stop losses and Exits were a little vague.  So I plan to test a number of different methods I know have proven to work for different strategies in the past.

 

 

Are you struggling to make consistent profits in today's markets? As a thank you for reading this post I would like to offer you my complete downloadable guide to a very successful system I personally trade and profit from. Just click the download button below to discover how the professionals consistently take money from the markets.

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