Many of the tools I’ve tried subtly spoil the surprise when used for forward-testing.
What I mean by forward-testing is taking a chart, scrolling back in time – without peeking! – and then stepping forward one bar at a time. The purpose of the exercise is to try out a discretionary trading strategy in a safe environment. Granted it is not the same as live trading but it does give one a way to see how the decision-making might work, if not feel.
The trouble is that many tools give away the secret of the next bar with subtle and not-so-subtle hints about what the next bar is going to do. These type of signs you wouldn’t really find at the right edge of a real chart, they are artifacts of display in the middle of the price history.
Take this example at the top of this article. Can you guess what happens with the next bar without applying any trading strategy, just looking at how the chart is rendered?
Next post will explain this example and show you a tool that’s not a spoiler.