You should be able to do it. To ensure I’m understanding you correctly, please define what you mean by “landmark prices” – are these subjective or discretionary?

In short, if you can define your entry system to a set of rules, you should be able to back test it.

Your Trading Coach,
Dave

I’ve been testing my system in real time and have kept all of the metrics you’ve mentioned. I’m interested in backtesting but my entry is based on historical landmark prices + Moving Averages etc.

I’m not sure how this can be mechanically back-tested? Any ideas?

Cheers,

Andrew

The difference between the two examples is that one is referencing the expectancy per trade, while the other is the expectancy per $1 risked.

Here’s what I mean:

Expectancy = (% of wins x average win size) – (% of losses x average loss size)

Per trade that would be:
(80% x $100) – (20% x $1000) or $80 – $200 = –$120

Per $ risked that would be:
(0.8*1) – (0.2*10) or 0.8 – 2 = -1.2

Hope that helps clear things up.

Your Trading Coach,

David Jenyns

(% of wins x average win size) – (% of losses x average loss size)

So in our example we can see that:

(80% x $100) – (20% x $1000) or $80 – $200 = –$120

In this chapter you express expectancy as a decimal instead of a dollar amount:

“If your system has an expectancy of +0.75, on average, you would expect to make 0.75 times the amount you risked in the trade.”

I’m a little confused, does this mean that in the first example
that I would lose $120 for every dollar I risked?

Thanks for the prompt…

Yes, the spreadsheet in http://www.trading-secrets-revealed.com helps with the on going maintenance of your system – it calculates all the key metrics you need to keep an eye on. Again, I very much appreciate your support.

Your Trading Coach,

David Jenyns

You did not mention your excel program “Trading Summary” which answers all these questions.

Again a great video