Back Test TradingView is increasingly becoming a popular tool for traders as it allows them to explore possible trading strategies and to analyze their performance before investing hard-earned money in the markets. For novice traders, understanding and maximizing the system can be very beneficial in improving overall trading strategy and performance.
TradingView has built the “Back Test” feature to help traders simulate how their trading ideas might perform in real-market conditions. To use it, traders firstly need to pick a stock, think of their trading strategy then, in order to simulate all of the strategy signals and inputs, design a strategy on a chart. The Back Test feature can provide valuable information such as how the stocks might have behaved historically and how a trader could have used the symbols, signals and indicators.
The Back Test feature enables novice traders to test and refine their trading strategy and compare the results against other strategies. This helps traders to identify which strategies are most likely to be successful, and to what extent. Given the complexity of the process, it is important to familiarize oneself with the basics of the back test feature.
First, traders should select the instruments to trade. The Back Test feature allows traders to select from Forex, stocks, futures, ETFs and crypto markets. Once the market is selected, the trader needs to decide which symbol, indicators and signals are most appropriate and these may need to be adjusted each time the back test is run.
The duration of the back test should also be determined, along with how the simulated trading strategy should operate. For example, traders may choose to test strategies that use only the data provided, strategies using the low-high range of the past, or strategies trading only with volume and trend. All of these are valid, dependant on their trading strategy.
TradingView also allows traders to simulate transactions taking into account trading costs such as margin or commission fees. This is really useful to accurately measure the performance. After completing these steps, traders can click on ‘Run Back Test’ and TradingView returns a graph which helps a trader assess the performance of their strategy.
It is important for traders to understand the difference between strategies when choosing the back test feature. A technical strategy focuses on entry and exit points, relying on indicators such as moving averages and other technical tools. A fundamental strategy is based on analyzing financial reports and ratios in order to project future trends.
Back Test is a great tool to have. However, traders should also bear in mind that back tests cannot provide 100% accurate simulations of stocks in real time. Therefore, it is essential to understand market dynamics as well as to stay up to date with the news before implementing a trading strategy.
Overall, the Back Test feature on TradingView allows novice traders to test different strategies and to measure performance without risking their own money. With familiarity of the basics, traders may optimize their workflow by right size their positions and apply relevant filters. Considered strategically, Back Test Trading View is invaluable in helping novice traders to improve their strategy and performance.