{"id":1019452,"date":"2020-04-04T18:01:20","date_gmt":"2020-04-05T01:01:20","guid":{"rendered":"https:\/\/www.tradingheroes.com\/?page_id=1019452"},"modified":"2024-12-27T23:19:09","modified_gmt":"2024-12-28T06:19:09","slug":"plan-test-trade","status":"publish","type":"page","link":"https:\/\/www.tradingheroes.com\/free-forex-trading-course\/plan-test-trade\/","title":{"rendered":"Chapter 7: How to Create a Trading Plan and Test Strategies"},"content":{"rendered":"<h3 style=\"text-align: center;\">Share This Course: [addtoany]<\/h3>\n<p>&nbsp;<\/p>\n<p>Now let's get into trading strategies and how to test them.<\/p>\n<p>This is the fun part!<\/p>\n<h2>Learn a Strategy, Create a Plan<\/h2>\n<p>The first step is to learn a strategy. You can get a strategy from anywhere on the internet.<\/p>\n<p>Many sites are trying tell people that their strategy is the <a href=\"https:\/\/www.tradingheroes.com\/holy-grail-trading-strategies\/\" target=\"_blank\" rel=\"noopener\">holy grail of trading strategies<\/a>.<\/p>\n<p><strong>But here's the big <em>secret<\/em> that most traders won't tell you&#8230;<\/strong><\/p>\n<p>If a strategy really does have an edge, it may work well for the person sharing the strategy&#8230;but it might not work well for <em>you<\/em>.<\/p>\n<p>It's like any other skill&#8230;<\/p>\n<p>Your buddy is an all-state basketball player, but maybe you can barely make a basket.<\/p>\n<p>You are good at car racing, but your buddy is terrible.<\/p>\n<p>Same idea with trading strategies&#8230;<\/p>\n<p><strong>So the key to success is NOT just having profitable strategy, but having a strategy that's profitable for you.\u00a0<\/strong><\/p>\n<p><em>Therefore, it's your responsibility to do the following:\u00a0<\/em><\/p>\n<ul>\n<li>Test the strategy to see if it actually has had a historical edge<\/li>\n<li>If it does, then trade the strategy in a demo account to see if it works for you<\/li>\n<\/ul>\n<p>Makes sense, right?<\/p>\n<p><strong>So now go out and find 3 strategies that appeal to you.\u00a0<\/strong><\/p>\n<p>Then create an exact trading plan for each of those strategies. To instructions on how to create a plan and get a <a href=\"https:\/\/www.tradingheroes.com\/forex-trading-plan-guide\/\">free PDF download<\/a>, read this post.<\/p>\n<p><em>Simply learning a strategy won't make you successful. The following steps will help you master a strategy&#8230;<\/em><\/p>\n<h2>Backtest Your Plan<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-1019464\" src=\"https:\/\/www.tradingheroes.com\/wp-content\/uploads\/trader-at-mac.jpg\" alt=\"Trader at Mac Computer\" width=\"1200\" height=\"601\" srcset=\"https:\/\/www.tradingheroes.com\/wp-content\/uploads\/trader-at-mac.jpg 1200w, https:\/\/www.tradingheroes.com\/wp-content\/uploads\/trader-at-mac-768x385.jpg 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p>Creating a trading plan is easy.<\/p>\n<p><strong>Actually doing the work to test is takes some perseverance. This is the point where most traders fail.\u00a0<\/strong><\/p>\n<p>So if aren't willing to do the work to test your strategies, you might as well give up right now.<\/p>\n<p><em>Seriously.\u00a0<\/em><\/p>\n<p>But if you're ready to do the work to be successful, then it's time to <a href=\"https:\/\/www.tradingheroes.com\/good-backtesting-result\/\"  data-wpil-monitor-id=\"234\">backtest<\/a> your plan.<\/p>\n<h3>What You Need<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.tradingheroes.com\/resources\/best-forex-trading-software\/\">Charting software<\/a> that has enough testing data available. You can also use backtesting <a href=\"https:\/\/www.tradingheroes.com\/resources\/best-forex-trading-software\/\">software<\/a>, which will speed up the process.<\/li>\n<li>A spreadsheet to record your trades.<\/li>\n<\/ol>\n<p>Then simply go as far back as possible on your chart and place &#8220;paper&#8221; trades in your spreadsheet. Once you are done, tally up your results and see how the strategy would have performed.<\/p>\n<p>You can get the the full <a href=\"https:\/\/www.tradingheroes.com\/forex-backtesting-guide\/\" target=\"_blank\" rel=\"noopener noreferrer\">backtesting tutorial here<\/a>.<\/p>\n<h2>Start with a Demo Account and Place a Trade<\/h2>\n<p><strong>Start with a demo account.\u00a0<\/strong><\/p>\n<p>I know that it's tempting to trade with your real account. But you should first prove that your strategy has an advantage, before you trade with real money.<\/p>\n<p>If you blow out your account, then it will be much harder to make money once you improve your skills.<\/p>\n<p>So start small and take it from here.<\/p>\n<p><strong>This is called <a href=\"https:\/\/www.tradingheroes.com\/backtesting-vs-forward-testing\/\"  data-wpil-monitor-id=\"163\">forward testing<\/a> or Beta Trading.<\/strong><\/p>\n<p>You can learn more about how to do it <a href=\"https:\/\/www.tradingheroes.com\/forex-forward-testing-guide\/\">here<\/a>.<\/p>\n<p><strong>Only move forward with live trading if your testing is successful.\u00a0<\/strong><\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\">Yee Haw!<\/h2>\n<p style=\"text-align: center;\">You're doing great! Now you'll learn about trading psychology&#8230;<\/p>\n<div class=\"su-button-center\"><a href=\"https:\/\/www.tradingheroes.com\/free-forex-trading-course\/trading-psychology-success\/\" class=\"su-button su-button-style-3d\" style=\"color:#FFFFFF;background-color:#ffa035;border-color:#cc802b;border-radius:5px\" target=\"_self\"><span style=\"color:#FFFFFF;padding:0px 40px;font-size:29px;line-height:58px;border-color:#ffbd72;border-radius:5px;text-shadow:none\"> Go to Chapter 8<\/span><\/a><\/div>\n<p>&nbsp;<\/p>\n<div align=\"center\">\n<h3 style=\"text-align: center;\">Share This Course: [addtoany]<\/h3>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn how to create a trading plan and test it. Without a plan, you&#8217;re flying blind. <\/p>\n","protected":false},"author":1,"featured_media":1019464,"parent":12916,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-1019452","page","type-page","status-publish","has-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Chapter 7: How to Create a Trading Plan and Test Strategies - Trading Heroes<\/title>\n<meta name=\"description\" content=\"Learn how to create a solid trading plan and test your strategies before risking any real money. 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