The Art of Properly Backtesting

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City of Industry, CA --(www.USEquityNews.com)-- 07/01/2009 - Investing Strategies industry alert provided by U.S. Equity News. For those of you who enjoy backtesting, or for those of you who are just learning how to backtest, I'm going to give you a simple test to run over the weekend. What I'd like you to do is to run the following test and send me the test results by Sunday night. This includes the number of trades, the % correct and the average. gain per trade.
Here is the test. You'll test this on the SPY going back to January 1993.


The SPY is above the 200 day ma. If the 2 period RSI closes under 25 two days in a row, buy 10% of a position on the close of that second day the RSI under 25.
If at any time you're in the position, and it closes lower than your original buy price, buy 20% more. If at any time you're in the position and it closes lower than your previous buy position (the 20% position) buy 30% more. If at any time you're in the position and it closes lower than your previous buy position (the 30% position) buy 40%, more getting you to a full position. [Read the full article]

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