Testing checklist
When testing strategies, run through this checklist to make sure you haven’t forgotten anything. Also, note that you might not be able to manually test everything, and that’s all right. It’s okay to not be perfect and to have some unknowns when you trade a strategy. But ideally, know the unknowns:
- How many trades did you have? Testing over 3 months with 3 trades is different from testing over 1 week with 100 trades and they tell you different things.
- Did you test it through ascending, descending, and sideways trends? But did you also test it in the previous X days/weeks/months (depending on the timeframe)? Did you test through a period where the market changed direction (situation: your filter identified a bull market, you trade it, but it takes a while for the filter to identify that the market became bear while your strategy is still running)? Was the dataset detrended?
- Are proper filters in place? Is it biased toward a certain...
