Guide
How does the *Backtesting System strategy work ?
The Backtesting System is an integration tool designed to enhance the effectiveness of strategy testing on TradingView. The first step involves connecting custom indicators by appending a small code snippet to signal buy or sell conditions. With a simple example of an EMA crossover, one writes a code where a crossover of EMA 50 and EMA 200 will yield a positive signal (+1) for a bullish scenario and negative one (-1) for a bearish scenario.
After setting up the indicator, the trader connects it to the Backtesting System which provides extensive options for trade customizations. These include toggling between allowing long or short deals, setting the system to wait for the end of a deal before initiating a new one, and enabling strategies to force open or reopen trades. The system also comes with multiple Stop Loss and Take Profit options, from fixed percentages to dynamic calculations based on ATR or recent price extremes. Additional settings like 'Add %' allow for modification of Stop Loss parameters to incorporate a buffer percentage, and 'Fixed R:R' enables dynamic risk-reward ratios based on the stop loss type.
In essence, after integrating their indicators, traders can manipulate the Backtesting System settings to simulate a variety of trading conditions and strategies, optimizing their approach before implementing factual trades.