Most traders in India operate on “Hope” and “Gut Feeling.” They see a stock go up, they feel a “vibe,” and they buy. This is the fastest way to increase the entropy of your bank account (i.e., make it go to zero).
In first-principles terms, Backtesting is the process of Reducing Subjectivity.
Instead of guessing if a strategy (like buying a Hammer at a Support level) works, you use a “Time Machine” (Historical Data) to see how it *would have* performed over the last 5 or 10 years.
If a strategy didn’t make money in the past, it almost certainly won’t make money in the future. Let’s learn how to scientifically validate your ideas using TradingView.
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| Win Rate | > 50% | Gives you the confidence to keep trading. |
| Profit Factor | > 1.5 | Shows that your wins are much larger than your losses. |
| Max Drawdown | < 15% | Ensures you don't go bankrupt during a "losing streak." |
| Sample Size | > 50 trades | Statistically proves that the results aren’t just luck. |
The “Smart Friend” Advice
Backtesting is the bridge between a “Gambler” and a “Professional.” If you haven’t backtested your strategy, you are just donating your money to those who have. Treat your trading like a laboratory, and the market will treat you like a scientist.
Now that you can validate your strategy, let’s look at a “Floor and Ceiling” tool that professional intraday traders use every morning.
Move to C2 Spoke 11: Pivot Points: Finding the Market’s Daily Navigation Levels to master daily trading levels.