Early this week (well, actually while making my watchlist this weekend), I spotted a very nice setup on the USDCHF 4H charts. It had all the characteristics of a solid reversal setup and I was waiting for for my entry criteria to be fulfilled:
As expected, $USDCHF 4H retraced back into previous support-turned-resistance, showing some rejection of this level. Waiting for a solid bearish signal to potentially short this one. #forex#tradingpic.twitter.com/BJqJVV3w5b
— Felix De Vliegher (@smartfxlearning) November 13, 2017
On Tuesday, we got our solid bearish signal! A massive bearish engulfing bar was printed, so once I saw this, I got in. I actually managed to get a slightly better entry than the close of this bearish engulfing candle, but the idea is the same.
“I’m close to going live with my system! It works perfectly!”
– “Great! Have you backtested your system?”
Backtesting. One of those things no trader is really excited about. It usually takes a long time, involves a lot of data crunching and it’s generally, well, boring work.
Yet, it’s the one thing traders can’t live without either! To just say that it’s important for your trading success would be an understatement.
Imagine you’re Elon Musk and you’re building SpaceX rockets. You’ll want to test if they can actually be launched and if they fly as expected, right? Backtesting is that step for trading. It checks if something works as expected.
Or rather, you need to ask yourself the question:
How can I make sure that my strategy has an actual edge?
For a long time, I have been interested in bitcoin. I’ve been playing around with it since 2013 and I fully believe that the whole cryptocurrency ecosystem is only getting started.
However, I’ve never featured anything related to cryptocurrencies on Smart Forex Learning! The biggest reason for this is that for a long time, I just saw them as a long-term investment holding, not something I’d actively trade. Nevertheless, I kept track of the price charts.
Interest in cryptocurrencies is growing and when I look at the bitcoin chart, it is starting to look like something I would trade. Cleaner charts, (relatively) less crazy spikes. It’s still not what you would call a quiet market, but a fast-moving market like this also provides us with opportunities.