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Optimal Period for Strategy Testing

February 28, 2011 by

It’s hard to overestimate the importance of proper strategy testing in Forex trading. Just taking a strategy out of your head and applying it to a real money account usually leads to a total wipe. Unlike optimization, which is optional and sometimes dangerous, testing is crucial. But what period of time should be dedicated to strategy testing?

It’s quite obvious that spending several days to try a strategy that uses weekly data isn’t a good way to do it. An incorrect conclusion may be drawn from this fact that the short-term or scalping strategies can be tested properly on a span of several days or weeks. But in reality, it turns out that such testing isn’t enough because the system is traded during quite a limited set of market conditions and probably during just one trend wave.

So I believe that all strategies should be tested on rather long periods of time. It’s good to demo trade a system for at least several months before going for a real account, but it’s even better to spend 1–2 years on it. Unfortunately, it requires a lot of time and patience. And what do you think about it?

What is the optimal period of strategy testing?

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If you want to share your opinion or questions regarding the optimal period to test the Forex strategies, feel free to reply using the form below.

One Response to “Optimal Period for Strategy Testing”

  1. Adam Smith Forex

    I think the need more than 2 years to learn a good strategy in forex to get good method that can give profits daily.

    Reply

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