If you’re big on backtesting, listen to me now. How many times you backtested a specific pattern, saw it working X amount of times in the past, but failed to actually profit from it?
You were in a tunnel vision, completely forgetting that you can’t backtest the moment that is already gone. In that moment:
- Would you be actually taking that trade, or does it look good in hindsight only?
- When exactly you would be entering the trade, where’s your SL & TP?
- What else would you be looking at, besides the main chart, and how that would be influencing your decisions?
- What would be your emotional condition at the time? Would you be happy or sad? After a long winning or losing streak?
- What fears or illusions would you have in your mind? What would be the degree of distortion in your perception of reality?
My dear reader, just tell yourself the truth – none of the above can be backtested and there’s no point in trying.
Through backtesting, you build a probabilistic model which you then use to predict the future behaviour of the market. You’re operating in the past, which is exactly what all retail traders are taught to do. Which makes you blind to the present moment, so you’re not learning anything new about the market, therefore you can’t make correct decisions, and obviously you can’t make money.
I can say this with confidence because I’ve spent around 10,000 hours watching the charts and this retail behaviour is dead obvious. It was obvious in the charts from 2005, and it will be obvious in 2045 too, because human nature doesn’t change so quickly. Retail stubbornness and short-sightedness are probably the most obvious things I’m witnessing in the forex market on a daily basis.
So if you want to trade “more” like a professional trader, you need to know how they act. Professionals also use probabilities but in a different way:
- They use their professional knowledge to evaluate the current situation from multiple angles,
- They define the current probabilities of their predictions,
- They watch the market as situation evolves and re-evaluate the probabilities,
- When the moment is right – they act on their predictions.
They operate in the present moment, and that puts them ahead of the crowd. They don’t search the past to confirm how probable their prediction is. They primarily use the data that they have in the present moment.
Deep down they know that whatever they do, it cannot be backtested, as the present moment is unique. This reveals the true nature of professional trading – while retail traders blame their strategy for their failures and keep backtesting, professionals know that they’re the only ones responsible for their results.
Looking for a safe haven in backtested data is the same as looking for the holy grail. It simply cannot be found because it doesn’t exist.
If you’re tired of searching for the holy grail and feel ready to be trained by a professional trader 1-on-1, check out my professional forex training & mentoring course.
Thanks for reading and have a beautiful day.