HISTORICAL PROBABILITIES
It finally occurs to him that he should back test some techniques and see how
some of his indicators would have worked historically; he reasons that if he can
do this, he would have more confidence and discipline in his trades. He begins to
understand that no one (including himself) can predict the market. He starts to
realize that he needs to have some confidence that the techniques he is going to
use have worked in the past. He now knows that he can’t predict the market. He
thinks, “All I really need to know is what the probabilities are when I put on a
trade according to my rules, and I should make money.”
Our technical trader has now passed the second big initiation and begins to sense
the need for trading a strategy. He realizes that there is immense value in
historical strategy performance data. He purchases TradeStation and dives into
learning how to design and trade strategies.