ForexGuy has written something of immense importance over at our forum concerning the testing of a Forex system. As he explains:
Traders I wanted to provide a word of caution. While there are many great systems out there (some free like on this site) it does not absolve you of doing the hard work to ensure the profitablity of that system.
You must still do the backtesting, forward testing and expectancy calcualation before applying any new trading system. While many of you will say, “Of course, what does he think I am, an idiot?” Ask yourself are you really doing it?
I’ve attached a spreadsheet of a trading model I have been using for a while now. I hesitate to post it because it is not a “free system”. But I want you to see the work that goes into testing a system.
This was actually a very easy system to test because it takes only a small number of trades per month. But as you can see is still very effective.
Remember traders, “what we attain to cheaply we asteem to lightly” – Thomas Paine.
Being a trader is hard work. Don’t short change yourself by bouncing from system to system. TEST, TEST, TEST!
Here is the link to the spreadsheet: