The YouTuber is doing more backtesting, specifically on the popular xau usd trading market to test a simple strategy using filters for entries and exits. They’re using the replay function on tradingview.com to record the profitability of the strategy for a few trades. Their criteria for entry include three moving averages and an oversold or overbought reading on the RSI. They risk 1% and look to make 3% on their winners, using price action to place stop-losses, and not setting any breakeven trades. They show a raw look at backtesting, updating results and waiting patiently for the best trending market opportunities.

Backtesting Trading Strategies on the XAU/USD Market: A Comprehensive Guide

Introduction

In this video, we will explore the world of backtesting trading strategies on the XAU/USD market. This is one of the most popular trading markets, owing to its high volatility. We will be backtesting a simple strategy and measuring its results to give you an idea of how backtesting works.

Choosing a Market and Timeframe

We have scrolled back to a random period of time and chosen the gold market on the four-hour chart. We will be using the replay function on tradingview.com, which is available in the premium version, to simulate trades.

Defining the Filters

We will be using three moving averages (200, 100, 50) to identify trends and the RSI (7 period) to filter out overbought or oversold readings. For stop-losses, we will be relying on price action and risking one percent while aiming for three percent on winners. We will not be using any breakeven trades.

Testing the Strategy

We will be recording the progress of a few trades to see how our strategy performs. Our entry point will require all three moving averages to align and an oversold or overbought reading on the RSI.

Recording the Results

We will use a notepad to record each trade’s outcome, and we will not get emotional or second-guess our choices.

Conclusion

Backtesting is an essential tool for any trader. By simulating trades based on past market data, you can test different strategies and learn how they would have performed in the real world. Remember to choose a market and timeframe that suit your personal style and to stick to your chosen filters when entering and exiting trades.