Check Forex trading indicators on a historical material - the most effective way of backtesting

One of conclusive advantages of work with trading indicators - an opportunity to backtest it for a historical material. Check of efficiency of strategy on the basis of the given last years - a method used by many successful modern traders. One of many examples - Richard Dennis, for 16 years of trade in the Chicago market of futures increased the condition from $400 up to $200 millions. Similarly to the majority of the well-known traders working with futures, Dennis itself is engaged in the analysis of behaviour of the market. Together with a team of mathematicians and programmers he carries out backtesting all known Forex trading indicators. Result of checks becomes a set of the trading rules allowing successfully to use trends, quickly to limit losses and beforehand to prepare for the adverse periods. Aspiring to prove, that his success - consequence of objective scientific researches, instead of personal qualities, Dennis has collected group of 23 person which he named " the turtles ". Working according to the ordered rules, 20 from 23 participants of experiment who are not having before experience trade, have received mid-annual profit at a rate of 100 %. This experience testifies that check of carefully formulated trading rules on a material of the historical data really yields excellent results.

The method of testing of trading indicators on a historical material is obliged by the success to one of properties of market behavioural models: eventually they vary insignificantly. According to Alan Grinspen, " the system of values essential to market economy, is adjusted among other by laws of psychology. Conservatism of a human nature - a guarantee of that in the market the future will be adhered to the past ". As philosopher George Santajana wrote to " Lives of Reason " (1906): " Those who is not capable to remember the past, are sentenced it to repeat ".

By tradition the majority of traders makes of the decision proceeding from own intuition and the "popular wisdom" submitted in numerous popular manuals. Unfortunately, value judgment of investors of the facts widely known to all community makes such decisions ineffective and not allowing to receive even average result. Process of development of the strategy, basing on casual selection of the facts received from diverse sources of the information, appears unreasonably labour-consuming. The investor is not capable to subject to the analysis, even to reveal errors of the method and consequently, it is deprived opportunities to study on own mistakes. The similar situation can suit the participant of the market during the periods when the economy experiences rise and the profit are great, but during heavy times - and they invariable overtake us - carelessly made, unchecked strategy becomes a serious handicap in work.

Testing of trading indicators for a historical material - the practical method allowing in any conditions to achieve of good result. The checked up, objective and carefully formulated strategy excludes subjectivity and charlatanism, not leaving a place to guesses and doubts. To work with it - means to execute a number of the precise instructions giving an opportunity to supervise risk, receiving maximum high profit. Besides having checked up the development on the historical material concerning to many market cycles, the investor can receive model for successful trade on any types of the markets.

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