The KEY Component of Strategy Development & Testing

Sometimes failure can be the best thing to ever happen to you. I have many examples of this being true in my life and it’s recently happened to me again.

I’ve been vigorously working on developing a new trading strategy & decided to document my journey in a YouTube series called “Building A Forex Strategy.” The goal of the series is to show traders the process in which I go through and of course hopefully come up with something that works

One of the key points that I’ve emphasized throughout the series is that strategy development and testing should be looked at as a journey instead of a straight route to a predetermined destination. What I mean by that is that the true value of the testing phase isn’t in the numbers that you produce, rather the observations that you make along the way.

After passing my baseline test I moved on to phase 2, which consists of attempting to boost the win percentage of the system by filtering out losing trades. The way in which I filter out losing trades is by looking for a confirmation signal at entry.

I had 3 ideas in mind on how to accomplish this, unfortunately, none of them produced an outcome that performed better than the baseline test. So after becoming frustrated I decided to move on (for the time being) and start working on phases 3 & 4 which dealt with target taking and stop losses.

After a failed test of an idea that I thought might help with getting me out of losing trades earlier, I observed that although it didn’t help in that capacity, it did look to help with filtering out losing trades when it came to my entries. So I immediately jumped back to phase 2, retested everything with this new filter and ended up with a result that was positive and potentially usable. It’s still way too early to tell if this strategy will be a success or not, but if it does, it’ll be super cool to explain to traders how a key component of its success came by accident.

They say we can make our own luck. Why? Well because luck happens when preparation meets opportunity. If you’re doing things the right way you’ll be able to catch things and if you don’t they’ll slip through the cracks. Remember traders, testing isn’t about getting to the end result. Rather, it’s about the journey that occurs between the start and the finish.

Here’s a link to the video presentation I did on this subject

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