In this episode of Truth About FX, Walter lets off some tricks on how to backtest news-based strategies and what is the secret trick that you can use to trade these numbers. What is this bump that you should be careful of and how can you jump over it using psychology? He also shares this useful tool that can help you figure out historical data.
Download (Duration: 02:42 / 6.5 MB)
In This Episode:
00:35 – economic calendar
01:13 – scrape the date off
02:11 – historical data
Tweetables:
Filter out all the news [Click To Tweet].
Trade like real time [Click To Tweet].
Check out FXStreet calendar [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. How can I backtest a news-based trading strategy?
Walter: Great question as I’ve actually done this. So, what I would recommend you to do is you can go to the FXStreet economic calendar. Let’s say, you want to know what’s happened with this over the last 5 years or whatever. What you would do is you can go in to the FXStreet calendar.
Let’s say you’re doing something on the Swissie. You will just filter out all of the Swiss news and you can set the date there back to whenever – to how far you want to go back and capture. Like for example, let’s say you’re trading the Swiss National Bank Interest Rate decision and you’re using that news release for your strategy then what you can do is you select that news in the economic calendar.
Either you or actually hire someone else to do this where they’ll scrape the date off and just basically select all of the… Like highlight the data in the economic calendar and then they paste into a spreadsheet for you.
So now, what you can do is you can go to Forex Tester and you can work in the Forex Tester up to the date of the news release. And then when you see the number in your spreadsheet, you go ahead and take the trade based on the number. So you’re trading it as if it happened in real time because you have all these old numbers.
I’ve done that and that’s something I think make a lot of sense. It’s always hard of course. Hindsight bias can creep in if you know for example that in 2008, the Yen got really strong for instance or whatever. You understand those things that’s kind of hard to untangle those but at least with the news numbers, you probably don’t know what the Swiss National Bank decided on December 15, 2003.
So that’s pretty cool that you can go back and do that. That’s the best way I’ll be able to figure it out in terms of taking the historical data. FXStreet calendar is awesome. So I would recommend doing something like that.
Hugh: Very cool. Thanks, Walter.
Walter: No problem.
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