Determining the operability of trend indicators using the "Always in position" strategy
The essence of the problem
There are a huge number of trend indicators, but unfortunately, most of them are just pretty pictures. Such indicators are incapable of giving a trader a statistical advantage over the market; instead, they will add chaos and losses to their trading.
What needs to be done
A good approach would be to remove all useless indicators from your arsenal and retain only those that actually work. Trading will become more accurate, and the expected variance of your account balance line will be significantly reduced.
Simply put: you will be able to trade better and with less risk to your wallet.
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your account will grow more steadily;
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you will be less likely to experience sharp drops or rises in your balance;
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It will be easier for you to predict how much money will be in your account in the near future.
How to do it
The simplest, yet most effective way to test trend indicators is the "Always in Position" strategy - when the indicator's trend changes, we close the position and immediately open the opposite one.
This is what it looks like on a chart. The AceTrend indicator.
Simply test the indicator on at least 10 years of history. Look at the test chart and ask yourself: Do I really want to participate in this?
Testing the AceTrend indicator on the GBPUSD currency pair over the 2008-2026 period.
Doesn't look very good?! And this is still a very good result. Test your indicators using this simple strategy...
There are also more advanced concepts for testing trend indicators. For example, I use "The Best Trend Indicators RBTI rating."
📊 Summary: From "pretty pictures" to systematic trading
Instead of searching for a "pretty" indicator that shows good entries yesterday and the day before, run tests over a longer period. This will save you a ton of stress, money, and time!
