Trading Blog

This is how much I earn if I backtest for the entire year of 2023

LIM WEI XIANG

Mar 8, 2024 — 2 min read

Details Backtest Review

TL;DR

Total backtest profit for the year 2023 = $4255 (42.55%) returns. Average $355 (3.55%) per month.
Total 136 trades, 53 losses and 83 wins.
1-hour Timeframe, XAUUSD(Gold), $10,000 Capital, $100/ 1% per trade.
Mechanical Consistency Trading Strategy; Purely rule-based strategy, zero guesswork, zero analysis.

Disclaimer: I am not a financial advisor. The content for this article is purely for educational/research purposes only and is merely based on my personal opinions.

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I began implementing this strategy in May 2023, continuously refining and adjusting it along the way. I experimented with various approaches, exploring different strategies until October when I eventually settled on my definitive mechanical consistency strategy. This blog functions as the comprehensive backtest for my strategy, scrutinizing its performance in real market conditions spanning from the beginning to the end of 2023. Explore the details below:

Backtest Details

Total number of trades executed: 136, 83 wins & 53 losses.

Average win rate: 61% win rate

Average risk-reward ratio: 1 to 1.6x (TP 1 at 1 to 1x, TP2 at 1 to 2.3x)

Trading Pair: Gold (XAUUSD)

Trading capital $10,000, 1% per trade

Timeframe: 1 hour

Total Returns: ~42% per year

Average Return per month: 3.55%

5x Losing Streak and 11x Winning Streak

Personal Opinion

I’ve developed what I believe to be an effective trading strategy, but I occasionally question its effectiveness due to the adage that “past results do not guarantee future success.” To address this concern, I regularly use backtesting to evaluate how the strategy would have performed in previous months.

To be candid, while my strategy may not be the absolute best available in the market, it aligns seamlessly with my lifestyle. It requires minimal analysis and its entry timing suits me perfectly. I’m unconcerned about its lower win rate or returns compared to other strategies. My primary focus is that it consistently generates profits and outperforms the S&P500 index. As long as it meets these criteria, I’m content with its performance.

Challenges and Obstacles

Consistency remains the ultimate challenge in trading. Maintaining a routine of waking up promptly at 8 am every day, logging in, setting up trade entries, and making trade decisions uninfluenced by external factors is an incredibly tough task. No matter what happens, do not fall back into the cycle of doom.

Endnote

Even though these results are based solely on backtesting, they provide a strong indication that this strategy performs effectively. This outcome bolsters my confidence in the strategy and reinforces my commitment to staying true and consistent in its application.