How to use the BAR MAGNIFIER on TradingView

hey traders welcome back to another
video in this video i want to explain
some of the important changes that the
trading view developers have made to the
inbuilt strategy tester that back tests
our scripts on historical data so
recently the trading view developers
have updated how the strategy tester
works on trading view and these changes
have eliminated some of the significant
limitations i've mentioned in previous
videos so this is a really exciting
development for trading view i'm
currently working on recording some new
content covering strategy automation and
how i go about that process but before
we dive deeper into that world of
panscript it's important that we
understand
how the new backtester system works
because it's going to help us better
navigate the strategy development
process in pine so let's break down some
of these really important changes in
today's video and in the next video
we'll start utilizing some of these
really cool new features of the strategy
tester the first change that they have
implemented if i open up the settings
for this strategy script that you see on
my chart right here i'll go over the
source code for this strategy in a
future lesson but for now i just want to
make you aware of these new features of
the strategy tester so here's the
settings menu for this strategy script
that i have added to my chart if i go to
the properties tab and i scroll down to
the bottom here you can see this new
option
back testing precision
and we have this new setting here called
use bar magnifier this will be off by
default on any script that you create
but from now on we need this on at all
times
and i'll explain why in a moment the way
we turn this on at all times in our
scripts
is if i open up the editor here and add
a comma on the end of my
strategy annotation function this is
where we set the
default settings for our strategy
so here i've set my titles my overlay
setting to true my calculate on order
fills is set to true my initial capital
is set to ten thousand
us dollars
and if i hover over this
um the very last parameter we have to
work with there is use underscore bar
underscore magnifier
we need to set this to true on every
single script we create
the only time you wouldn't use this is
if you can't afford to upgrade your
trading view plan to the pro plan i
believe this is locked behind the pro
plan on training view but ideally we
need this on at all times so let me
quickly explain what this setting does
and why it's so important so in the past
the training view strategy tester the
way it would
run its back test is it would simulate
how price action unfolded on historical
data i don't know if i've covered this
on youtube but in my password mastery
course i explained how this works so the
broker emulator would simulate price
action based on these um
sort of
parameters here
so if the bar's high is closer to the
bars open than the bar's low then the
broker emulator assumes the intra-bar
price was moving this way from the open
to the high to the low to the close so
let's jump over the chart and i'll show
you what that looks like so if i zoom in
on this
candle here with this giant wick to the
top the way the broker emulator would
used to work is if the bar's high is
closer to the bars open then the bar's
low
then the emulator would assume that
price opened here rallied to the high
fell to the low and then closed here
it's a very rudimentary system
it doesn't take into account the nuances
of price action and the fact that price
might have opened here
and then fell a little bit and then
rallied and then fell a little bit and
then rallied and then went sideways for
a little while
had a spike up to the top and then fell
and then rallied a little bit and then
fell again and then ended up closing
here the strategy tester system used to
not do a very good job of simulating
this it would simply simulate this price
action in a four-step motion the bar's
open
is closer to the high than the closes
and so would say it would assume that
price went up
down closed
now with this new setting this new
back testing precision setting we can
actually tell the trading view strategy
tester
to simulate this
bar how price action unfolded on this
bar
based on a lower time frame so if i use
the bar replay tool and i click on this
bar
and i drop down to
first of all let me draw these levels
out so we've got the high and the low of
this bar
if i drop down to a five minute chart
and zoom out a bit
now you can see that our hourly bar
opened here and we do have this large
wick to the top so price opened here
rallied to the top and then fell to here
rallied to here fell to here rallied to
here
fell to here and then closed here
this gives us the full story of that one
hour bar
and now with this new setting uh the bar
might whoa what did i do to my drawing
tool there with this new setting the
used bar magnifier tool the strategy
tester uses a lower time frame to
simulate how price action unfolded on
this one hour bar
that gives us greater precision
in simulating our strategy performance
over historical data and it's extremely
extremely important that we get accurate
simulations of our strategy on
historical data and so there is no
reason why you shouldn't have this
turned on at all times
so from now on make sure this is turned
on in all of your strategy scripts again
the way you do that is just add this
parameter to your strategy annotation
function this will ensure that this
setting is turned on at all times so
that's one important change that
tradingview have made to the strategy
tester
i'll go over this in more detail in
future lessons if you want to see which
lower time frames correspond to the
higher time frame
i'll leave a link to the blog post below
where tradingview announced this new
feature here's the blog post here
so they've structured this table in a
weird way but
this means that if your time frame is
less than 240 so four hours all the way
down to
60 so the 60 minute chart
then the intra bar time frame that is
used to simulate your historical price
action the way that the bar unfolded
is the five minute chart and so now when
my script code is running through the
strategy tester on historical data
using this bar as an example
the strategy tester uses the five minute
time frame
to simulate how this hourly bar unfolded
my internet's playing up here for some
reason it won't load the chart but you
get the idea i've already gone over this
um how this works and so the five minute
time frame will show a different story
on how this hourly bar really unfolded
the reason why this is important
is because so let me find an example
here the problem i'm going to have is
that i need to find a recent example
because you can only load historical
data so far back on trading view
so i might need to go through a few
different pairs here to find a recent
example all right here we have a trade
that might just work if i zoom in here
this is perfect
so notice that the strategy tester is
saying that this trade was closed for a
profit our take profit was hit
we entered short on the open of this bar
after our setup candle was detected our
stop loss was here i'll take profit
there
the strategy tester reckons that this
trade won in the past
without this turned on it's possible
that this
strategy tester would record this
winning trade
inaccurately when it was actually a
losing trade price opened here and maybe
it rallied up and hit our stop loss then
rallied down to hit our take profit
after we'd already taken a loss
and then rallied up and closed up here
we don't know how price unfolded on this
bar but by turning this setting on if i
use the bar replay tool here and we draw
on our stops and targets when my
terrible australian internet
finally loads the script there we go
if i put my stop loss and my take profit
on the chart
and then we drop down to a five minute
time frame that's what the hourly time
frame uses as its lower time frame
reference point when
simulating intra bar price action on
historical data if i click on the five
minute time frame here we go you can
clearly see
that
price came close to our stop loss
depending on the spread this might have
been a losing trade but that's a
different
can of worms altogether
but in this particular case our stop
loss was not hit
price fell to hit or take profit and
then rallied past our stop loss
that's what the strategy tester is doing
when we have this setting turned on as
i've mentioned several times now but i
need to make this very clear that you
guys understand this because it's really
important and so this trade was
accurately simulated by the strategy
tester as a winning trade based on that
lower time frame
uh price action so that's one new really
important adjustment that the trading
view developers have made to the
strategy tester
and from now on we keep this on at all
times the second important adjustment
they've made is this brand new deep back
testing beta system and basically what
this does is if you have this turned off
our strategy is being simulated across
all of the bars that are loaded onto our
chart so if i go all the way back to the
last bar on my chart or the very first
bar on my chart that's right here
if i zoom in
put a vertical line there
you can see that this is
that this bar is the second of january
2019 at 8am and so my strategy tests the
results here uh showing me how my
strategy performed during this window of
time this sample from
2nd of january 2019 until today this is
my trading results my strategy results
but if i turn the deep back testing on
now i can choose a date range
to
simulate between
so now i can trade all the way back to
2005
up until today
and if i click generate report
i make sure that i've got this turned on
click generate report
now this will take a little while
especially if you've got
this setting turned on it will take
quite a bit longer because the strategy
tester needs to simulate that intra-bar
price action on every single hourly bar
all the way back to first of january
2005 but what this tester system will
now spit out when this
back test is completed the data here
will include every trade from 2005 until
now and there you go you can see we have
352 trades
that's because i'm on a broker that
doesn't have a lot of historical data if
i go to a different one let's go to
oanda
and do exactly the same thing
awanda has price data that goes back
until
pre-2005 but i'll leave it at 2005 for
now click generate report you can see up
here that we only have 134 trades
in our sample size based on the bars
that are loaded on my chart but now that
i've generated a report from 2005 until
now we have 837 trades and it gives us
very different
drawdown and return metrics so from 2005
until today this system took 837 trades
had a 54 win rate a 100 return roughly
and a 14 max drawdown not ideal for such
a long time frame 17 years to double
your money is a long time but that's not
the point of today's lesson this is just
an example and obviously
the idea is to find a strategy that
works on multiple pairs multiple markets
perhaps even multiple time frames and so
these returns tend to compound over time
and you'll end up with a much higher
than 100 return across several pairs
several strategies
but the point here is
this deep back testing system has just
run our script on historical data from
2005 until now instead of just from
what was the 2nd of january 2019 so
that's a really important feature here
as well
now this deep back testing system won't
show visually the trades on your chart
because you can only see what data
you've loaded
but if we open up the list of trades and
scroll all the way down you can see that
some of our trades here begin in 2005.
so that's it for today's video sorry it
was a bit of a ramble but these new
changes to the strategy tester are super
important and we will cover this in more
detail in more practical use cases and
examples in future lessons but for now
just be aware
that
if you hear me speaking about any
limitations with the trading view
strategy tester a lot of that has been
alleviated by these two
new features
the back testing precision make sure to
have this always turned on
and the deep back tester
is something that we will explore in
more detail in future lessons
that will give us significantly more or
significantly larger sample sizes to
work with which is extremely important
when developing robust trading
strategies but for now i'll wrap this
lesson up here thanks for watching i
hope you enjoyed the lesson i hope you
enjoy the content to come i'll be going
to cover some really exciting and
interesting stuff um make sure to hit
the subscribe button if you haven't
already and all of that youtuber stuff i
have to say and uh yeah good luck with
your trading be careful out there it's a
bloodbath at the moment that will lead
to some great opportunities in the
months to come but for now make sure
you're managing your risk properly
be careful
and yeah i'll speak with you very soon
take care
you