Here I am at home with some of my favorite trading and investment books

 Hi.  My name is Jackie Ann Patterson and I’m a stock trader, computer geek, author of BackTesting Blog, and the editor of BackTesting Report. 

This is my story of how backtesting helped me overcome loss and profit in the stock market

 My interest in computers goes back to the 5^th grade.    That fascination propelled me through engineering school, where I programmed in literally a dozen languages before graduation.  From school into professional software development, then management then marketing, winding up organizing technical seminars for a big software company in Silicon Valley. 

 Thinking that life is too precious to confine to an office, even a nice private director’s office overlooking the park, I left to find my own way.  After a year knocking around, I founded Own Mountain Trading Company to help others thrive in the markets.

 I’d developed quite a passion for investing and stock trading, starting with my first stock purchase in 1995.   Over the years, and especially in the months leading up to my bid for freedom, I’d done quite well in markets.   Of course, the moment I left my corporate job and became a full-time trader my growing equity curve promptly went south.    What a harrowing experience!

I devoted almost all my time to learning my trade, reading all I could about the markets, taking various classes, experimenting with different styles, and picking up the necessary tools, such as backtesting.   Fortunately, I have risk control to keep me alive long enough to learn what I needed to improve.

In hindsight, I see that I had two hard lessons to learn.  One is that drawing living expenses from a trading account creates undue pressure to take unnecessary risks.   I can’t be successful by saying “C’mon, baby needs a new pair of skis!”   But with multiple streams of income, I find it much easier to exercise the patience needed to deal with the markets.    That is one reason for productizing my research reports.   Another is that I find I do a much better job when I know other people will be reading over my shoulder. I like holding myself to a world class standard.   More importantly, I’m risking my own money based on the data in these reports so they better be good!

 That brings me to my second lesson which was the need for objective decision-making.   I don’t want to be entirely in fortune’s hand.   And I don’t want to tear myself apart second-guessing every loss.   I want to know, based on scientific evidence, that I have a good chance of succeeding and that losses are just temporary set-backs.   Who else wants to go into the market knowing you have the odds in your favor?  

Key skills to move toward that goal are identifying and sticking with objective trading plans.   Enter backtesting to find out how well all the technical indicators really work and to help build a plan for success.  Even a fully discretionary trader can benefit by knowing the historical track record of the elements of their own and others’ trading strategies.   I certainly gain by knowing how my favorite indicators have performed in the past.  In fact, it has been very eye-opening because through a back test I’ve uncovered several instances where highly-touted indicators have done worse than chance.  I’ve also learned that guiding the decision-making process with a carefully back tested strategy that’s proven itself adds consistency and objectivity.  

Backtesting Blog chronicles my trading strategy development process.  I’m back at it for another round of back tests - wanting to be more thorough in four aspects: 

• spanning 14 years and 7147 stocks of impeccable price data
• uncovering the truth about objective technical indicators and strategies
• evaluating entries separate from exits to see what really works
• testing multiple time horizons from active investing to swing trading

Of course the whole purpose is to be better prepared for the stock market!

I created the BackTesting Blog to discuss issues that arise during backtesting and to chronicle the process of discovery of well-tested trading strategies.   In short order, its drawn readers from all over the world.  To join them and read behind-the-scenes technical articles about backtesting and objective stock market strategies, click this button to automatically direct the BackTesting Blog RSS feed to your Inbox for free

The actual BackTesting Reports are sold separately, see the sales page for more info.

Disclosures

BackTesting Report is an affiliate of INO.com, Strategic Profits Inc, Worden Brothers Inc, and an Amazon Associate.   If you follow a link to one of their sites and make a purchase, we may receive compensation.   As an affiliate, I sometimes receive complementary materials for review.

BackTesting Report is a division of Own Mountain Trading Company.   No one associated with Own Mountain Trading Company is a licensed investment advisor and we don’t pretend to give individual advice.    The risk of loss is always present. Please read the Terms of Use and other important disclaimers below.

Contact Info

(My username is snowhawkp on the TradeStation and Worden discussion forums)