About Strategy Testing
Testing a strategy is a two-step process. First, test your trading rules on historical data (also called backtesting) to examine the results that are generated. Once they perform sufficiently to your requirements, you can apply the rules in a TradeStation Chart Analysis window and automate them to see how they perform in real-time. Complete strategy testing involves both historical and real-time evaluation.
To back test your strategy on historical data, you apply a strategy to a Chart Analysis window and TradeStation automatically reviews every entry and exit signal and graphically displays them on the screen. You should come to an understanding of how your strategy enters and exits trades as well as other behaviors. If you find that your trading strategy fits your trading personality, you may feel confident in using the strategy to make future trading decisions.
To test-trade your strategy, you can automate the strategy so it automatically generates new entry and exit signals as they occur. You can then evaluate exactly where the trades occurred and at what price. For more information, see Automating a Strategy.
The Strategy Performance Report provides detailed information about the strategy. This report may be used to help decide if the trading strategy is right for you. When testing a strategy, you may factor in the costs of your trades-costs such as broker's commissions, slippage, and margin. This may help you ensure that the profit and loss figures reported in the Strategy Performance Report are as realistic as possible.
For more information, see About the Strategy Performance Report.
Related Topics
About the Strategy's Onscreen Cues
Customizing Studies and Strategies
Changing the Status of a Strategy