Test Your Trade Entry

On page 2 of the How To Test Robots PDF,  I describe a technique for testing the quality of your trade entry.

The “Entry Test” immediately tells you if your entry logic is any better than just randomly entering the market.

This test is brutal. You would not believe how many indicator-based systems use entries that are no better than random!

The technique is simple.  You replace your normal exit logic with a “bar exit”.  A “bar exit”  will close a trade after it has been open for a number of bars.

The “bar exit” does not rely on profit or loss.  It simply closes the trade.  You run this on a back-test and then count how many trades were profitable.

You don’t care about how much profit.  You’re just looking  to see if the trade was at a profit or loss when it was closed.

The more trades closed profitably, the better the entry.  At the very least, your entry should score higher than 50%.

I add the “bar test” to all of my EAs.  It’s pretty easy.  I show how in the PDF.

Note:  If you haven’t had a chance to read it yet, here is the link to the  How To Test Robots PDF