How to Test Indices Trade Strategy - Testing Index Trade Strategies

Generating Signals with a Strategy is one of the easiest method to trade Stock Index, it is the best way which a beginner can attempt to figure out the direction of the market price trend with a good level of accuracy, & with a little back testing on demo trading account so that to gradually increase the level of accurateness of this trading signals strategy

Best way to backtest a strategy is by following these 2 steps:

Index Paper Trade
Stock Index Demo Trade

Stock Index Paper Trading- This technique of testing a Strategy involves placing your Stock Indices Trade Strategy on the trade charts, then take the chart back to a specific date, 3 months back e.g., & then using this trade chart history to figure out where your Index strategy would have given buy, sell & exit signals. Write these points & the profit per Index trade transaction on a piece of paper and then calculate the total profit after you've recorded a good number of trade transactions like 50 paper trade positions Index transactions & determine if your Index trading method is overall profitable, win ratio, loss ratio and the risk:reward.

This is an ancient method/technique of testing Indices Strategies that was used by traditional investors when there was no online exchange markets or desktop pc computers for that matter, trader would use something such as the A3 or A2 paper, graph layout paper and draw the trading charts manually (Imagine drawing the charts on your trade platform by hand every day or every hour, would you be ready to do that? doubt it!) Those traders were hardworking than most, some were so used that they still continue to paper trade the online market and plot the trade charts on paper, anyway for our paper technique example, just a sample data of 50 trade positions is all we need.

A good Indices tool to use to back-test your Stock Indices Strategy is known as the MT4 Step by Step Tool. Found in the MT4 trade charts toolbar of MT4 software platform, If you want to find the trade charts toolbar on the MT4 platform software it is at the top of MT4 platform software. If it's not: Click View (next to file, top left corner of MT4)>>> ToolBar >>> Charts. Then click the Customize button >>> Select Step by Step >>> Click on Insert >>> Close.

MetaTrader 4 Software Platform Chart Tool-bars - How to Trade Indices For Beginner Traders

How to Test Indices Strategy - Testing Strategy Examples Explained

MT4 Chart Tool-bars - Step by Step Button for BackTesting Index Trade Strategies Explained

Once you get this MetaTrader 4 tool you as a stock indices trader can move your trade chart backwards, and use this MetaTrader 4 trading tool to move the trade charts step by step while at the same time testing when your Stock Indices Trade Strategy would have generated either a buy or sell trade, & where you'd have exited the trade transaction, then writedown the amount of profit & loss per Index trade transaction and out of a sample number of transactions you'd then calculate the overall profits/losses generated by the strategy.

If your strategy is profitable on paper trading method then, its time to demo practice trade & testing if the it is profitable on the real market as it is on paper method. This is the process of testing or backtesting a Strategy.

Maintain a Journal to keep track of profitable trades, and determine why these trade positions were profitable. And also keep a log of all losing trades, determine why these trade positions made a loss and then avoid making these same mistakes the next time you trade using your trading strategy.

Tweak your Stock Indices Method until you get a good risk : reward ratio, with the trade signals that you generate. Aim for a good risk:reward of 3:1 and a win ratio of above 70% is a good ratio, with good Index equity management even a strategy with a win ratio of even 30% - Less than half of your Index transactions make profit you as a stock indices trader can still make a profit. You might want to read this topic to know and learn what the table/illustration below is talking about: Risk:Reward Ratio.

How Do I Test Strategy? - Testing Strategy Examples Explained Explained

Risk Reward Ratio Chart of Money Management Strategy Rules - Trade Strategies Explained

A manual Stock Index Trade Strategy is still the best way to generate trading signals compared & analyzed to automated trading Strategies, a manual Indices strategy is a better technique & is also much simpler to implement.

However, other traders prefer automated Strategies & for those then they can check the info on this page MQL5.com EAs and automated trading Strategies.

You can also view our extensive listing of trading strategies topics that offers you with various techniques of buy and sell technical analysis using a number of diverse technical methods, go to the Indices Strategies Section.

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Trade Stock Indices

How to Test Indices Trade Strategy - Testing Index Trade Strategies