Forex Backtesting: How To Use The Trend To Get Better Trades
In this Forex trading vlog, I share a quick backtesting tip I was given on how to use the trend in a Forex backtesting. Vlog #223
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I Believe That Context Is Important In Trading…
Simply said, I believe that context is important when trading the Forex market. I will never apply a set of tools (i.e. indicators) until I know what phase the market is in.
While understanding the phase of the market is pretty simple when looking at the chart, it gets tougher when coding a script that will be run automatically to backtest a trading strategy.
Being Around Traders Helps…
I gave a call to my friend Houston Truong last week, who recommended looking at the order of moving averages on various timeframes. That is something I hadn't thought about.
The cool thing about this method is that it allows putting a certain weight on the trend on various timeframes. As a matter of fact, a trend on the weekly chart might be more significant than a trend on the daily chart for instance.
While a lot of work remains on that topic, I simply wanted to share the idea with you and I hope it can be beneficial if you are at the stage of backtesting a trading strategy (whether that's your first strategy or an improved version).
Have you ever used the trend in a Forex backtesting? What was your experience? Comment below and we'll chat!
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