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Thread: Back testing

  1. #1
    Rookie Member

    Back testing !!!

    I have 2 questions that I hope someone can help me with.
    1: I'm trying to backtest several technical analysis techniques and strategies on binary options with changing results. Has anyone else tried to do this?
    2: I'm having trouble calculating accurate resistance and support levels. Does anyone have a good formula for that?

    Thanks for your help!
    Eelco

  2. #2
    Legendry Member Michael Hodges's Avatar
    there is no formula for support and resistance. These lines are highly subjective, and are subject to near med and long term news events. Generally highs/lows are good areas to target, using a higher time frame chart is also a good idea. Fibonacci Retracements are another tool that can help predict support/resistance.

  3. #3
    Veteran Member Ronnel's Avatar
    Quote Originally Posted by gelderen View Post
    I have 2 questions that I hope someone can help me with.
    1: I'm trying to backtest several technical analysis techniques and strategies on binary options with changing results. Has anyone else tried to do this?
    2: I'm having trouble calculating accurate resistance and support levels. Does anyone have a good formula for that?

    Thanks for your help!
    Eelco

    Hi gelderen!
    This will be long so please bear with me...

    I'm very fond of back testing and demo trading different strategies too. I do get changing results too but not as much now and unlike before. With all the different indicators and strategies that I have tested, I found out that the main problem was within me and not with the strategy or with the indicators because I tend to follow the candles more than anything. I can put so many indicators on my chart but still I go with the candlestick analysis and S/R. After lots of back testing and trying different strategies, I learned to accept my trading style and adapted to it. Now I still play with other strategies but I only use two type of chart when I'm doing live trading and that is Semi-Naked Charting and Ichimoku Kinko Hyo which fits my personality perfectly and brings in lots of ITMs for me.

    There are traders who likes following indicators and some that goes with price action and some by pure candlestick analysis and S/R. I found out about my charting personality and now I'm sticking with it, the question is did you find yours??? Once you find your trading style, lots of ITMs will surely follow.

    I also had the problem of calculating accurate S/R before and still do get confused from time to time but became very minimal now. My secret is not really a secret... My best tool for getting accurate S/R lines is Ichimoku's Chikou Span where I plot my S/R lines on it's peaks. Often I use Chikou Span as a stand-alone tool (I remove all of Ichimoku's crap) when I'm doing naked chart analysis and it's awesome. The problem is that you have to be good with Ichimoku before you can play with this properly or it will confuse you and get lots of OTMs. If you get better using it, you'll notice plotting S/R lines will become very easy and with awesome accuracy.

    Here are two of my best charts that I use for live trading which is Ichimoku and Semi naked. Notice how easy it is to find proper S/R areas...

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    But before you go trying both strategies, I would suggest that you learn this first...

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    These came from my diary (http://forums.binaryoptionsthatsuck....g-Ronnel/page9) page 9, post #87. I wrote that during the time when I was having problems plotting proper S/R. I still use the same technique especially when I'm doing fully naked charting analysis and it still works for me.

    Please try my suggestion for S/R plotting because it may be the answer for your question but as I always say, please take my advice with a grain of salt because I'm just a newbie

  4. Thanks edo, Martin Kay, khyangg thanked this post
  5. #4
    Veteran Member Dan21's Avatar
    Thanks for sharing Ronnel! Very informative charts and easy to spot. I also like trading on H1 charts but sometimes dive into smaller time frames too

  6. #5
    Veteran Member Ronnel's Avatar
    Quote Originally Posted by Dan21 View Post
    Thanks for sharing Ronnel! Very informative charts and easy to spot. I also like trading on H1 charts but sometimes dive into smaller time frames too

    I'm honored to get good comments especially coming from a senior trader like you, many thanks Dan21!

    Yes I do like H1 and higher TF but recently I noticed that I'm using M1 as my main chart more and use higher TF as reference only. I also noticed that I tend to trade shorter TF expiry now, mostly M10 and M15. This really surprises me because short TF expiry scares me before. I'm still scared though... lol!

  7. #6
    Legendry Member willyw's Avatar
    Quote Originally Posted by Ronnel View Post
    I'm honored to get good comments especially coming from a senior trader like you, many thanks Dan21!

    Yes I do like H1 and higher TF but recently I noticed that I'm using M1 as my main chart more and use higher TF as reference only. I also noticed that I tend to trade shorter TF expiry now, mostly M10 and M15. This really surprises me because short TF expiry scares me before. I'm still scared though... lol!
    Yes, use longer time frame as a reference to analyze the major trend to trade on short TF.
    You will soon get immune to those scary short TF expiry.

  8. Thanks Ronnel thanked this post
  9. #7
    Junior Member TMHughes's Avatar
    indeed a very detail explanation of how to use support and resistance lines. Maybe you should write an article for BOTS about it, I think they are looking for guest posters.

  10. #8
    Veteran Member Ronnel's Avatar
    Quote Originally Posted by TMHughes View Post
    indeed a very detail explanation of how to use support and resistance lines. Maybe you should write an article for BOTS about it, I think they are looking for guest posters.

    Many thanks TMHughes!

    Yes I can but what I write may not have much weight since I'm still a newbie..

    Actually I have been sharing what I learned and try to make it as easy as possible (spoon feeding style) so that newbies like myself can learn easier so that we can all make money a lot faster minus all the hair-pulling and the drama. I've also shared a post about Candlestick Analysis that I learned from a retired Japanese pro trader which I also think will be a big help for traders who are still learning candlesticks. I can also help with Heikin Ashi and Ichimoku Kinko Hyo (Japanese style) because most of the tutorials, books and YouTube gurus don't teach it like how my Japanese senior taught me. They say that these strategies are for trending and longer TF expiry only but I'm using them also even for ranging and low TF expiry like M5, M10 and M15

    Here is the thread (newbies please study this!!): http://forums.binaryoptionsthatsuck....arting-J-style

    Cheers!

  11. #9
    Junior Member
    oscillator divergence, fractals, bullish/bearish engulfing patterns are also good to locate s&r zones.

    once you find a s&r zones , scroll back in history and check if the s&r zone was once support and resistance and zone broken by one big candle. farther back to check its up to you. once you have those 3 criteria met you good to go.

    doesnt always works out but its just tools to help you out .

  12. #10
    Specialist Member protrader's Avatar
    Quote Originally Posted by gelderen View Post
    I have 2 questions that I hope someone can help me with.
    1: I'm trying to backtest several technical analysis techniques and strategies on binary options with changing results. Has anyone else tried to do this?
    2: I'm having trouble calculating accurate resistance and support levels. Does anyone have a good formula for that?

    Thanks for your help!
    Eelco
    There is no good or bad formula, there is only your formula that you must trust. I personally use several methods but breakout points are working very good as support/resistance. Could be trendline, channel, fibs or range breakouts.
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