Backtesting a Swing Trading Strategy
By Dave Mabe
In this week's episode of Line Your Own Pockets, Michael and I have a heated discussion on swing trading versus day trading.
It starts innocently enough with a question about how to backtest a swing trading strategy with a "trail forever" component.
But then it quickly turns into a swing trading versus day trading cage match.
We do finally end up agreeing on the fundamental approach to backtesting a swing trading strategy - barely.
I'm interested to hear your take. :-)
Topics discussed:
The differences between backtesting a day trading and a swing trading strategy
Open-ended trailing exits make backtesting more complicated, and how to handle this in your test
How outliers can affect your backtest and how the trailing-exit component can magnify them
Overlapping positions suck up buying power, creating an overnight choke-point
And much more...
-Dave
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