Cash Flow Club June 22nd, 2017: Backtesting Trading Systems Part 1
June 22, 2017
Last update: August 2021
Tonight’s Show: Backtesting Trading Systems Part 1 with Coach Tyler Craig, CMT
Join us for tonight’s Cash Flow Club: Chartered Market Technician, Tyler Craig will host today’s session titled “Backtesting. You can do it, put your back into it!” Tyler will illustrate how he uses ThinkorSwim’s ThinkBack® tool to backtest trading systems. You’ll learn how to plot the equity curve of your system under varying market environments to discover exactly how your rules would have performed. Bring your backtesting questions and prepare for enlightenment!
Important Note!
** In backtesting, past performance is no guarantee of future results. **
Watch the Replay
If you missed last night’s show or you would like to watch it again, check it out on the player below (PRO Members Only).
Notes from the show
Build the rules of your Naked put system
Step #1 Security Selection
- Pick a stock/ETF that I think I can make money on selling puts over time. And I want test to see if it would have worked over the past 6 months, 1 year, 3 years, whatever!
- If I use a stock – then I have to deal with earnings every quarter
- If I pick an ETF – then there are no earnings!
- USO
- XME
Step #2: Entry
- Date: Every 45 days
- Strike: Sell a delta closest to 0.20
- ALWAYS on approach. I want to passively sell puts EVERY SINGLE MONTH on USO
- Why? B/c I think it will rise over time and systematically selling puts will generate better returns than buy and hold (hypothesis)
- When I’m 45 days out I will look at the trend. Only sell the put if we’re above the 50-day moving average (filter)
Step #3: Exit
- Ride to expiry and let put expire if it’s OTM.
- If ITM at expiry, buy to close the put to avoid assignment.
Metrics worth Measuring
- Number of wins
- Number of losses
- Win/Loss ratio
- Average dollar gain
- Average dollar loss
- Biggest loss
One of the biggest mistakes is to have a good system but bet so much that you give up on a bad month.
Backtesting Series [FREE Articles]
- Baby Got Backtesting Part 1 – Why Backtesting?
- Baby Got Backtesting Part 2 – How to Backtest?
- Baby Got Backtesting Part 3 – Backtesting Execution
- Cash Flow Club: Backtesting Trading Systems Part 1
- Cash Flow Club: Backtesting Trading Systems Part 2
Tackle Trading Resources on Backtesting
Why backtesting? What are the benefits? How to run backtesting? How to collect and analyze data? What types of trading systems can I backtest? What are the tools available to run backtests?
These and many other questions have been already answered in our extensive pool of articles on backtesting.
Tales of a Technician: Perfecting Your Process Part One
Traders should be process-oriented, not results-oriented.
Tales of a Technician: Perfecting Your Process Part Deux
Today we continue our carefully crafted tale on how to perfect your process.
Cash Flow Club June 22nd, 2017: Backtesting Trading Systems Part 1
If you missed last night’s show where Coach Tyler Craig talked about Backtesting Trading Systems or you would like to watch it again, check it out here.
Cash Flow Club June 29th, 2017: Backtesting Trading Systems Part 2
If you missed last night’s show where Coach Tyler Craig talked about Backtesting Trading Systems or you would like to watch it again, check it out here.
The Day I Discovered the Wheel: Backtesting
For all of you, who just like me, felt insecure about a certain strategy, and how to apply it, I have one thing to tell you: BACKTESTING!
Options Theory: Baby Got Backtesting Part 1 – Why Backtesting?
I have a confession to make – I never used to backtest, ever. Blame it on my ignorance.
Options Theory: Baby Got Backtesting Part 2 – How to Backtest?
In the first part of our backtesting series, we explored the what and why of the process. Today we get down to brass tacks and talk about how to go about backtesting.
Options Theory: Baby Got Backtesting Part 3 – Backtesting Execution
Welcome to the third and final installment of our series on backtesting. You selected a strategy and systematized it, and now you want to see how it would have performed.
Tackle Today: Back › Forward › Live
Backtest › Forward test › Go Live. The antidote for the risk of ruin.
Friday Feature: The Scouting Reports Backtest Series Part I: Why I started the backtesting
Have you ever wondered how well the Scouting Reports picks actually perform? This is what I am answering with this 3-part series on the Scouting Reports backtesting.
Friday Feature: The Scouting Reports Backtest Series Part II: What I learned from backtesting
Have you ever wondered how well the Scouting Reports picks actually perform? This is what I am answering with this 3-part series on the Scouting Reports backtesting.
Friday Feature: The Scouting Reports Backtest Series Part III: How backtesting shaped my trading
Have you ever wondered how well the Scouting Reports picks actually perform? This is what I am answering with this 3-part series on the Scouting Reports backtesting.
Friday Feature: The Scouting Reports Backtest Series Epilogue
“[…] It all comes down to mindset. Chipper talked about how it takes a strong will to be able to fail 70% of the time and press on, practicing, playing, and striving to be better without the failures weighing down on you.” Trust your system, traders.
Tales of a Technician: Backtesting 50-day Moving Average Signals
Come learn about why the 50-day moving average generates powerful trend reversal signals.
Friday Feature: How the S.T.E.P. System helped me build my rules
I used the information that was in the S.T.E.P. System to refine my trading plan to fit my personality. Continue reading.
Tackle Trading Resources on Journaling
Trading Journals
Good traders keep excellent records. Quality trading journals are essential to your progress and growth as a trader and keeping good records will help you learn more from both your income and expense trades.
Learn more about HOW the Tackle Trading Journals can help you become a professional trader.
Trade Journaling for Beginners [Free Articles]
Continue learning about this powerful trading tool: the Trade Journals. Tackle Trading has all the resources you need to MASTER them like a PRO. From the Trade Journals themselves to free articles and tutorial videos on how to make the most out of them, we got you covered!
How to use the Theta Research Tool to find the best stocks for Cash Flow
In this video tutorial, Coach Matt goes through the latest edition of the Options Research Spreadsheet explaining how to use it to find the best stocks to cash flow.
How to use the Theta Research Journal to find cashflow candidates
In this video tutorial, Coach Tim teaches how to find the best candidates to trade cash flow options strategies using Tackle Trading’s Theta Research Journal.
Tackle 25 List: The Best Stocks for Covered Calls (2016 Edition)
The Tackle 25 2016 Edition is up and better than ever. This list contains the best stocks to cash flow and compound your gains.
Tales of a Technician: Journals, Systems and Discretion
Once upon a time I didn’t use a trade journal. Then I got smart.
Trade Journal Series: How to use the Theta Research to find Covered Call candidates
In this video tutorial, Coach Tim Justice teaches how to find the best candidates to trade the Covered Call options strategy using the Theta Research tool.
Trade Journal Series: How to use the Trade Journal
In this video tutorial, Coach Tim Justice will teach you how to use a powerful trading tool: the Trade Journal.
Tackle 25 List: The Best Stocks for Covered Calls (2017 Edition)
The Tackle 25 2017 Edition is up and better than ever. This list contains the best stocks to cash flow and compound your gains.
The Day I Discovered the Wheel: Backtesting
For all of you, who just like me, felt insecure about a certain strategy, and how to apply it, I have one thing to tell you: BACKTESTING!
Tackle Today: Organization is Key Part 1 – Trading Business
You might’ve asked yourself at a certain point: “How should I start to make this trading activity a business?”
Tackle Today: Organization is Key Part 3 – Trading Journal
A Trading Journal is not something superfluous. It is crucial. Continue reading.
Notes from a Newbie: The Trade Journal is your friend
The trade journal is your friend, use it!
Options Theory: Size Matters
Do you have consistent position sizing and are you tracking your trade stats? If not, then here’s your invitation to start.
Friday Feature: Habits of a Wealthy Trader – Part 2: Journal Your Trades
You need to treat journaling as a fundamental step in your data and behavior analysis to help you succeed.
Tackle Today: Organization is Key Part 2 – Business routine
Like any other business out there, your trading business must have a routine. Continue reading.
Women in Trading – Journaling
Journaling: I know based on my own experience that it is the most dreaded topic when it comes to trading, yet it is an important part of a trader’s journey.
System Development 101 [FREE for PRO Members]
In the System Development 101 series, we will teach you how to build your own successful trading system from scratch in any market landscape, anywhere in the world you’ll happen to be trading from, in any core business you choose to work with.
Tackle Trading Playbook [FREE for PRO Members]
PRO Members now have unfettered access to the Tackle Coaches’ personal playbook containing thirty-one powerful trading strategies categorized according to the Options Greeks. Bullish, bearish, or neutral market conditions, this Playbook will help you dial up the right call more often and with greater confidence.
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
6-29 cash flow link?
https://tackletrading.com/cash-flow-club-replay-june-29-2017/
This was very helpful.