How to do Manual backtesting and walkforwards to understand a systematic trading system?

Manual Backtesting:

1. Define Rules:

   • Set clear entry, exit, stop-loss, and target rules.
   • Use consistent indicators or patterns (e.g., MA, Fib Grid levels, pivots).

2. Prepare the Charts:

   • Use historical price charts (e.g., on NinjaTrader, TradingView, MetaTrader).
   • Hide future candles to avoid bias.

3. Identify Trades:

   • Scroll through historical data candle by candle.
   • Mark trades based on your system rules.
   • Log trade details:
     • Date/Time
     • Entry Price, Exit Price
     • Stop-Loss/Target
     • Profit/Loss
     • Notes (e.g., why the trade was taken).

4. Record Data in Excel:

   • Columns: Entry, Exit, Stop, Target, Result, Time, Setup Notes.
   • Calculate:
     • Win Rate (%)
     • Average Risk-Reward (R:R)
     • Drawdown %

5. Analyze Results:

   • Look for profitability and consistency.
   • Identify strengths and weaknesses (e.g., win rate, consecutive losses).

---

Forward Testing:

1. Set Up a Demo Account:

   • Trade live market data with simulated money.
   • Use the same system rules as backtesting.

2. Trade in Real Time:

   • Execute trades manually on the platform when system signals appear.
   • Log details immediately in Excel to maintain discipline:
     • Entry/Exit Prices, Stops, Targets, Result, Market Notes.

3. Track Key Metrics:

   • Update metrics in Excel:
     • Win Rate, Drawdowns, Risk-Reward.

4. Compare Backtest vs. Forward Test Results:

   • Evaluate system consistency.
   • Adjust or optimize rules if large discrepancies arise.

5. Review Charts:

   • Take screenshots of entries/exits.
   • Document mistakes or missed opportunities.

---

Tools Needed:

• Trading Platform: Historical charts, live data, trade execution.
• Excel/Spreadsheet: For detailed trade logging, calculations, and analysis.
• Screenshots/Notes: Track and review decisions for improvement.