Okay here I go: does anyone know of a good, keep it simple book - or part of a book - that covers backtesting that would explain it from the ground up for a newbie

hello

a few points noticed

- graph looks great to start
- profit factor of 1.18 is a bit too low, acceptable strategy should be around 1.7+, good strategy ~2.0+
- Avg trade is $31.70. aim for at least $100, otherwise you will be trading for nothing after slippage
- 3 to 4 parameters excluding open and close time seems fine, the more parameters you introduce the easier it is to create a nice graph. so graph can be deceiving
- 5768 trades over 10 years means your system generates 1 to 1.5 trades a day. can your criteria be too loose?

cheers

Tiffsgreta 

Okay here I go: does anyone know of a good, keep it simple book - or part of a book - that covers backtesting that would explain it from the ground up for a newbie

Read the thread complety, you can see in the post two books can help, i will read .

Regards

walter739 

Read the thread complety, you can see in the post two books can help, i will read . Regards

Thanks Walter!

vmodus 

I believe @Carl123 is referring to Equity Curves, when he says 'equities'. That is how I read it.

Thank you @vmodus for clarifying for me!

simondul 

There is another book that I found as helpful (if not more so) as Kevin Davey’s “Building winning Algorithmic Trading Systems”. This is “Trading Systems - a new approach to system development and portfolio optimization” by Urban Jaekle and Emilio Tomasini. Both books also deal with risk of ruin and how to use Monte Carlo simulation to assess the likelihood of this occurring. Monte Carlo is part of NinaTrader so this is relatively simple to perform now. Both were incredibly helpful to me in understanding how to build automated systems and the steps required to make a system reliably profitable.

I've read Tomasini and Jaekle's book too and I can recommend it too to you, valuable insights into how systems traders approach their process. Davey and Tomasini use different processes but their overall approach is similar.