How to test and collect strategy or signal statistics

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How to test and collect strategy or signal statistics

If you do not know how you trade (how successful or unsuccessful), then you will not be able to earn in the financial market. Before you start trading, you need to study your strategy. / Signal far and wide.

Statistics is needed to solve several problems:

  • Psychology: reduce psychological stress. When you know that when testing the signal turned out to be cost-effective over a longer period of time, the losses incurred have a smaller impact on the psyche. This knowledge kills nervousness and gives confidence to enter without emotion (fear, loss of opportunity, fear of under-working, etc.)
  • Profitability: get knowledge about your signal and check it for profitability (it gives profit or loss), as well as how long it takes to get a profit (dring month or two or more)

By collecting at least this information, you can already have a complete picture about profitability of the signal used.

To collect signal or strategy statistics, you can use any terminal and a built in tester. Specifically, I use the most popular MT4 terminal (MetaTrader4) and its tester. The built-in tester is not very convenient and limited in use. And also does not have enough features for optimal testing of signals in manual mode. To eliminate inconvenience, I programmed my personal expert advisor (EA), which helps me test strategies manually and also performs its purpose well when trading on a real account.

What does the expert advisor (HurtLocker PRO) do and in what it helps:

  • Visualizes Entry, Stop Loss and Take Profit
  • Calculates Lot size depending on risk size (e.g. stop loss)
  • Signals and draw some alerts about them on the chart.
    • Divergence (bullish, bearish)
    • Engulfing (bullish, bearish)
    • Stochastics overbought and oversold zones
    • Pinbar
    • Break-even line (for multiple open orders)
    • Round levels: 00 and 50
    • Open, maximum and minimum of the previous day
  • It shows statistics on price charts for open positions (for each order separately):
    • red – loss
    • green – profit
  • Shows statistics in the advisor window
    • Open positions on purchases and their percentage of the deposit
    • Open positions on sales and their percentage to deposit
  • Displays the current total risk for open trades  (buys and sells) for the current pair (on which the expert advisor is running)
  • Displays the current total risk of open trades (buys and sells) for all pairs
  • Allows you to test manual strategies in the tester (!)

TradePanel Description – HurtLocker PRO

  1. Ability to write commands to run on the chart. The following commands are available:
    • close all – close all orders and delete pending orders.
    • transform or T – transforms horizontal lines into orders (pending or market)
    • open buy xx or open sell xx – opens buy or sell orders with stop loss at a distance of xx points. Order volume is calculated automatically
    • be or breakeven – sets a +1point to orders that is in profit (if possible)
    • close pending – removes all pending orders
  2. The level of risk from in percentage (calculates of deposit). Exposed to automatically calculate the volume for open order.
  3. Visualizer – opens 3 horizontal lines for visualizing entry and exit levels of the orders (stop loss or take profit)
  4. Signals that an expert advisor finds. Also displays visually on a graph.
    • Bear and Bull Divergence MACD (standard settings)
    • Bear and bullish engulfing pattern
    • Maximum, minimum of the previous day and opening of the current day
    • Overbought zones for a higher timeframe (4 hours by default)
  5. Transform – if there are lines on the chart that are opened by the Visualizer, this button transforms lines into pending or market orders
  6. Show order P / L – shows statistics for each order. Statistics are displayed next to each order on the chart separately. Profit shows in green color and loss is in red. Additionally, it calculates the percentage of the current deposit.
  7. Show BreakEven – if several orders are open, it is possible to use expert advice where to close all orders with 0 profit
  8. Statistics 1: shows the current statistics for the currency pair (current risk) and also for all pairs at the same time (total risk). It also calculates risk percentage in relation to the deposit.
  9. Statistics 2: Shows the current statistics for each order types (buy and sall) separately. Also shows the equivalent in deposit money.

What is the expert advisor HurtLocker PRO for?

Manual testing on the MT4 platform is limited, but with this expert advisor, you can effectively test any manual strategy in the MT4 tester.

For this purpose:

  • Open MT4 terminal
  • Run build in tester
  • Choose a semi-automatic advisor (HurtLocker PRO)
  • Start trading on an random timeframe (my advice: use 1 hour timeframe) and use any currency pair
  • Open a Microsoft Excel or Google SpreadSheet (make 4 columns: currency pair, TakeProfit, StopLoss, BreakEven)
  • Start trading with the advisor and write down all the results for each pair and timeframe separately

To improve your trading on a real account, you need to collect the following information (statistics) as you test in the tester:

  1. The number of positive and negative trades
  2. What was the best risk / reward ratio for getting a TakeProfit on your signal?
  3. What is the average waiting time then order closed by take profit?
  4. Which part of the market (downtrend, uptrend, flat) was the most profitable, and which was unprofitable for your signal
  5. What was the best risk (%) for an order for your psychology, in which you could control your emotions?

I advise you to write all the data into table. You can use free Google Spreadsheets or paid Microsoft Excel. It is very convenient, useful and fast! You can visualize all the data with charts, as well as calculate other parameters using the built-in formulas. All this will give you more insight into your trading signal and strategy. The more information you collect, the more you will understand – the tested signal can be used in a real deposit or not.

How to use an expert advisor can be found here

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