EfI9rVlHaWQ

hey Traders so for a while now I've been
promising to expand the channel to cover
broader trading subjects and Concepts
and the time has come to do that now I'm
not going to abandon or neglect
pinescript pinescript is still an
amazing language and I will continue to
teach that however I've taught that for
a few years now I've covered pretty much
everything that I'm a specialist in and
in my own trading I've been branching
out into other software for my back
testing purposes when it comes to the
stock market the trading view strategy
tester is fantastic for single Market
systems so currency Traders uh traders
who trade indices some Commodities but
when it comes to trading and testing a
portfolio of stocks where we're trading
multiple stocks in the same system
simultaneously uh trading view has some
major limitations when it comes to that
and that's why I've been studying real
test and I've gone through a mentorship
program with Nick Raj who is a reputable
Aussie Trader he's been trading for
decades he's much much smarter and more
experienced than I am he's a veteran
trader has been trading since the pit
days and um he's a big proponent of real
test and I've learned a lot of what I
know from him and in some of the videos
to come early this year I want to Branch
out into real test show you guys how
this software works the first video is
going to be how to install it get your
um stock data or data for you Americans
uh set up and integrated uh but for
today's video I just want to do a teaser
video and show you guys why I'm excited
about real test so what you see here is
a back test from a system I actually
trade in the live markets it's a mean
reversion long only US Stock Market
System um it trades 20 positions at a
time 20 different stocks and if I delete
this test really quick and come to my
script here is my code it's very
different to Pine script but it's just
as simple so I'll be teaching you guys
the syntax and basics of this code in
the videos to come but if I hit test
here look how quickly we test over a
couple of decades from 19 1991 till
today
8,336 days of trading over
35,800 trades here are my back test
results so we've got a 32% annual rate
of return with a pretty nasty 27% Max
draw down that was hit I'll go over that
later in the video but this was hit
recently it Max draw down was hit
recently before I started trading the
system the draw down was closer to 24%
so anyway not terrible metrics um I'm
comfortable with a lot of risk a lot of
my systems do tend to hover around a 30%
Max draw down um there's no there's no
free lunch in trading so the higher your
rate of return the higher your draw down
tends to be I have some things in the
works that um reduce this draw down a
bit but in reducing the draw down it
reduces my rate of return so these are
the sort of things I want to cover on
the channel going forward but anyway for
today's video let me right click this go
show summary report here is all the
trade um statistics for this system 58%
win rate we trade 20 positions with with
leverage so for every dollar I have I
can trade $2 and we took
35,800 trades and that back test took
about I don't know how many seconds less
than 10 seconds and that is the power of
real test and so in today's video I just
want to give you a teaser give you an
example of my trading process every day
I go through this process and place my
trades and I just want to show you guys
how easy it is to use real test to
semi-automate your trading process in
the stock market so today's video is
going to be more of a teaser video um
it's not particularly instructional
other than just giving you insight into
how I trade so if that doesn't interest
you you might want to skip this video
and wait for the next one where we'll go
into how to install the software and the
basics of its syntax that sort of thing
but for those of you who are curious
about this software and what it can do
for you let's get started all right so
here I want to show one of the main
advantages of using real test um to
trade a portfolio of stocks so here I
have my inter active broker account this
is a mean reversion portfolio so this
system trades um sell-offs in stocks it
buys sell-offs and the goal is to
capture small bounces across 20
different stocks I do use leverage on
this account so whatever my net
liquidity is I can double that to to buy
stocks with uh because we're capturing
such small bounces this system does
depend on Leverage to make a meaningful
amount of money so every morning I come
into my office office I turn on my
computer I come to this folder and
double click this batch file which runs
a bunch of commands which generate 20
orders or up to 20 orders that I need to
place into the US Stock Market using
interactive brokers so if I double click
this I'll fast forward this bit but it
doesn't take very long at all so now
it's opened up Norgate data so it's
downloading the latest stock data as you
can see here that's done now it's
running real test to import the latest
stock um price data which for me is is
overnight trading because I live in
Australia if you couldn't tell from my
accent so the US market trades overnight
for me starting at midnight roughly now
depending on how beefy your computer is
this can take a very short period of
time or a longer period of time mine
just completed then and now real test is
generating my orders order generation
successful we're done so now if I open
up this um Excel file here here are my
orders for today or the US market will
open tonight for me at midnight and
these are the orders I need to place
into my broker so first I need to sell
these markets I can automatically import
this entire list into interactive
brokers using um their it's called
basket Trader I do that for my buy
orders these are all limit
orders with a 1day
expiry um but for my sell orders I like
to sell these manually just so that I
can keep tabs on what the system's doing
especially early onto a system I've only
been trading the system for about 6
months so I I like to keep my um sort of
fingers and eyes in the system while
it's new so now what I do is I drag this
Excel sheet onto my second monitor I
open up interactive brokers and I go
through my open trades list which is on
the right here and I sell each stock
that I need to sell so I need to sell
docu which would probably be docu sign
yep uh something I use a lot with my
accountant uh doc youan so I've set up
my interactive brokers so that I can
just click on the stock click close
position and click market and that just
placed a market order to sell this Mark
uh this stock at the next Market's open
so tonight at midnight when the Market
opens the US Market opens for me this
stock will be immediately sold at Market
I don't recommend doing this in the
Australian stock market if you're an
Aussie watching this because um we do
have some issues with slippage um
because the Aussie Market is not quite
as liquid and things work a little bit
differently in Australia but in the US
at the market opening auction we can be
pretty sure that we're going to get a
decent price especially with such a
small account we've only got about
$40,000 here which sounds like a lot of
money to most retail Traders but it's
obviously not a lot in the context of
the US Stock Market which trades
trillions of dollars so we can be pretty
sure that this will be sold okay at the
open next up is Excel close Market
FDI close market and while I'm doing
this I'm just looking at the chart
glancing at the chart making sure
nothing fun is happening making sure the
system's not doing anything particularly
crazy that um perhaps I didn't account
for in my back test or notice in my back
test so FDI next up is
ivz this was a profitable trade you can
see the systems buying these Wicks that
is exactly what we're looking for we're
looking for a market to sell off hit my
limit order bounce for the day and then
we sell at the next Market's open so
close that at Market next one is pxd
another small profitable trade this
group green line is where our trade was
bought I don't know why interactive
brokers do it this way it's a bit weird
to me I wish this was just a line or
something instead of a gradient but
anyway I can probably change that in the
settings I just haven't bothered but you
can see this particular trade uh we
really bought the low of the day that's
pretty rare I can't zoom in any more
than this but um wow we really caught
the low of the day on this particular
Market that probably wouldn't happen
with a larger account size um due to
liquidity constraints but anyway um
close this at Market final one is
stwd so now this was a nice little
winner close it market so we're not
making a lot of money with this system
it's only 100 something dollars today it
makes on average $100 $200 a day on a
good day it's got a very high win rate
so it will often end the day profitable
but not by a hell of a lot of money and
the whole point of the system system is
to offset my Trend following systems so
when we do have a volatile day that's a
bit of a whipsaw day this system tends
to do really well in those market
conditions so if the Market's going
sideways this system does very well if
the market is trending some days it
won't buy any stocks because nothing
sold off to its limit order and in those
days my other accounts do well my Trend
following systems do well and so the
whole point of this system is to offset
bad days for my Trend flowing systems I
consider myself Prim primarily a
momentum and Trend following Trader um
but I did make this system to complement
my Trend following systems anyway I
digress there that's just giving you
some insight into my trading techniques
and style we're done normally this
process is a lot quicker for me because
I'm not explaining what I'm doing
normally I can have this completely done
from start to finish from generating my
orders to closing interactive brokers I
can have that done in about 3 minutes um
usually I'll generate the orders go make
a coffee by the time I get back they're
done and this whole process of selling
my open positions and importing my new
positions takes about 2 minutes um
you'll notice that it didn't close all
of the trades in this list that's
because of the way the system rules
function it does keep some trades open
longer than one day I'm not going to
give away the rules to the system in
today's video but you can see this stock
is still open uh the reason for that is
that the system needs to close for a
profit or hit its stock loss and it stop
loss is closing below this um shortterm
moving average price is just above that
so we're holding on to the stock tilt
tomorrow and hoping for that bounce to
come in tomorrow if it doesn't we'll
sell for a small loss hopefully a small
loss you never know with stocks they can
gap down pretty bad some days but that
is a very rare occurrence and conversely
sometimes they can Gap up the next day
so that tends to offset any issues with
gaps with this particular overnight
system anyway that's done we've sold all
our open profitable positions we're
keeping a couple of trades for another
day or two the final thing to do is
import my new orders for tonight that's
really easy now the way I've chosen to
do this is I've just made a simple
Google Sheets spreadsheet here um let me
zoom out my chart a bit um and what I do
here is I get my Excel spreadsheet here
copy all of these entries just crl a
contrl c contrl v into Google Sheets I
need to input my balance which is uh
39,19004 click transmit and all of these
orders get sent to my broker with the
correct position sizing correct by limit
prices according to the system from real
test click transmit and my work for the
system's done for the day again this
seems complicated it's really not this
really does take about 3 minutes per day
um I do this every day even if I'm on
holiday if I have an internet connection
I tend to do this just because it's just
so quick and easy it doesn't really
bother me to have to do this and there
we go we've placed about about just
under $80,000 worth of orders for
tomorrow's Market open and it was done
very quickly using real test so in
future videos I'm going to do a Basics
guide on real test how to install it how
to get Norgate data working with it all
of these things do cost money it's not
like trading view where it's all free
that's the catch when it comes to um
real test but the price actually isn't
that bad especially if you're a serious
Trader a professional Trader for me
because I run a company that deals with
pinescript through the pinescript
Mastery course I actually have to pay
about
$4,000 per year to use trading view
here's my trading view plan um this is
in US dollars so it's nearly 4,000
Australians so if I do USD to AUD yeah
$3,700 a year to use trading view for me
since I sell a script My ultimate
pullback indicator I have to subscribe
to the commercial subscription which is
pretty steep that's a pretty steep price
compared to Norgate data if I go to
Norgate data depending which data you
opt for uh the US Stock data starts at
$270 per year and real test is a $389
one-off payment um if you want updates
it does cost a little bit more to get
the latest version of real test but
overall we're looking at about
$659 to get started with uh real test
compared to for me um nearly
$2400
on on trading View and with real test we
get so much more when it comes to back
testing um I can run this is my mean
reversion system let's run a quick test
on it and I'll show you what the
performance metrics look like so I just
imported the latest stock data now if I
click test we'll run a quick test uh
doesn't take very long at all we just
did a test in the time I was talking
about this over 8,300 days let's go show
summary
report um we took 35,000 trades over
8,300 days I don't know how many stocks
we traded but it would have been
thousands and thousands of stocks we
have about a 59% win rate a 32% annual
rate of return according to this back
test with a 27% Max draw down um which
is pretty rough the Max draw down is a
bit steep um that has only happened in
the past couple of years of course as
soon as I start trading the system it
has its worst draw down ever um that's
normal in trading that uh you can be
pretty sure that your system will have
its worst draw down after you start
trading it uh but anyway I have some
things in the work that shouldn't
mitigate this draw down I am working on
a market on close adaption adaptation to
this system so that the trades are
closed out before the market closes so
you don't hold trades overnight um that
reduces The Return by a decent margin uh
but it does shave the draw down off by a
big margin so that's a change I'm
working on
optimizing but anyway you saw how quick
all that was the test here took a couple
of seconds to perform over thousands and
thousands of stocks uh to do that in
trading view is obviously impossible
trading view is fantastic for single
Market systems so if you're trading
indices or you're trading currencies um
it's fantastic for that even some
commodity ities but if you're trading
stocks it's borderline useless the
trading view strategy tester does not
have a portfolio based uh testing system
where real test does real test can even
trade multiple systems alongside each
other so we could have a mean reversion
system and a trend following System
trading the same pool of capital and we
could run that test and see how the two
systems perform when traded
simultaneously we could see how they
affect each other's um draw down and you
can even compare the equity code
on the chart so here's my Equity curve
for this system here's the
month-on-month breakdown of
profitability the Max draw down for each
year the total return for each year and
a whole bunch of other metrics that we
have to work
with um and you can even add your own
metrics we have some Monte Carlo
analysis here um you can add your own
graphs and stuff to this um to this
analysis as well quite easily so in
future videos I will be showing you guys
how to get started with the real test
it's a whole new world it's a whole new
bag of worms so to speak um compared to
trading view it has its own scripting
language it has its own nuances its own
style its own software obviously and so
this will probably become its own course
one day similar to the pinescript
Mastery course it's something that I'm
still learning myself um but it is a
very very powerful piece of software
that I encourage all serious Traders
especially if you're trading stocks I
encourage you to check this out um with
that said I'll wrap this video up here
and I'll speak with you in the next
lesson where we'll go into um how to get
this software set up how to get data
importing through Norgate data and how
to write your very first script I hope
you guys are as excited as I am to um
explore this new software just to be
clear I'm not giving up on Pine script I
will still be doing content for that but
when it comes to strategy development I
will definitely be focusing more on real
test for that side of things when it
comes to stocks especially there is just
no point in using trading view for
stocks again it's fantastic fantastic
for single Market systems but when it
comes to stock trading you cannot beat
software like real test there's
obviously Amy broker is a similar
software that's also quite good I've
used that in the past and if you're in
the Amy broker there's no real reason to
switch unless you want to back test
multiple systems simultaneously that is
an advantage that real test has over Amy
broker uh but anyway I digress that's
enough for today's video thanks for
watching and I'll speak with you in the
next video take care
for