≈ An antidote for the Risk of Ruin. ≈
You can’t run your system LIVE right from the start with real money. That is a sure path to ruin. You should always go on PAPER first. Here’s the path we suggest you take:
Backtest › Forward test › Go Live
The more time you dedicate running your system on the first two steps, the greater the chances of success. Let’s clear some definitions:
BACKTESTING is the process of testing a trading strategy on relevant historical data to ensure its viability before the trader risks any actual capital.
FORWARD TESTING is the process of testing a trading strategy on real market data. Although moving along with the live market, you are not actually putting in real money, but doing virtual trading. Also called Paper Trading.
Backtesting uses historical data; it’s in the past, done. You can’t change what happened. Whereas Forward testing, although on paper, uses real market data, it’s alive, moving. The psychological differences between these two situations cannot be underestimated. Uncertainty lurks when trading live. On the other hand, “you know the future” when Backtesting.
Some traders won’t even test anything, let alone collect data. They will just look at a 30-year monthly candlesticks chart and assume that their system will work. “It works. I’ll go live.”
We don’t need to show them the road to ruin. They’ve already stepped in.
Chart of the Day
The Bare Minimum Data
You won’t know if your system is working (a.k.a. making money) if you don’t gather, break and analyze the data. It doesn’t matter if you’re backtesting, forward testing or live trading, data is paramount to the success of your trading business. This is the bare minimum amount of data we suggest you should keep track of. The best way, however, is to have a trade journal like the ones we’ve built at Tackle. Go grab yours here.
Video of the day
How To Estimate Reward to Risk Ratio
Learn how to quickly estimate reward to risk ratios for your directional swing trades. In this video, we will show you how to use a simple and easy to use tool that will automatically do the math for you and help you make better trading plans quickly. Make sure to take advantage of the Tackle Trading scouting reports will provide you with quality technical setups that have favorable risk to reward ratios that you can rely on each and every week.
Today’s line up
When Covered Calls Move In-The-Money
Traders have all sorts of rules and guidelines for managing covered calls that move in-the-money. But, in the end, the route you choose comes down to your system’s objective. Today I want to compare the methodology on a conventional covered call to that of the Bear Tamer.
Traders Lounge 11PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show Replay
If you missed last night’s episode where Coach Mark Justice and Grant Larsen did a special version of the Traders Lounge turned into a Coaches Show or would like to watch it again, check it out here.
Bear Market Survival Guide MasterMind Group 8:30PM EST
Owners of our premium system The Bear Market Survival Guide are invited to attend. System architect, Tyler Craig, will be showing how to apply the principles taught in the course. You will find the recordings to previous meetings below.
Halftime Report 12:30PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.
Trading Justice Podcast Episode 305: An Interview with Grant Larsen
In this episode of the Trading Justice Podcast, Matt and Tim bring back the Market Skyline to analyze the broad markets from the top. Stock prices have started the year with a nice bullish move, and the most common patterns developing on charts are the V-shaped recovery.
Financial freedom is a journey
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