How to backtest a MACD Trading Strategy in Excel - Part 1

Part 1 of a video providing a step-by-step guide showing how to build a backtest model using Excel. The backtest is using weekly historic data from the S&P 500 and the inputs are customizable. If you would like to try a simpler method, have a look at my previous video: http://bit.ly/1MEC0Zi Tradinformed has a range of backtesting spreadsheets available. Become a better trader by testing your existing strategies and developing new ones. Check out the available backtest models here: http://bit.ly/24T9mz0 My eBook course on building backtest models in Excel is available in the Amazon Kindle Store: http://amzn.to/15NDaw4 To read the background article and see the formulas used: http://bit.ly/1RBvgmw Subscribe to this channel: http://goo.gl/S3Wnrv Follow me on Social Media! Twitter: http://bit.ly/19etSBO Facebook: http://on.fb.me/1715mCE Or Google+ http://bit.ly/1zRkAWi https://www.tradinformed.com

Comments

1. Mark, something does not make sense on this back test.On the first trade, you have 19.29 as the Entry Level, 24.28 as the Profit Target and 18.29 as the Stop Loss Level. If I buy for the $1000 Capital shares, that would come out 51.84033 shares. If I sell that at the Profit Target level, I make $258.6833 profit, if I sell at the Stop Loss Level, I lose $51.84033. However, your algorithm adds $250 or deducts $50, depending on the trade result. The ratio maybe the same, but the $ Profit at $ Loss therefore the Capital calculation is incorrect. (And if I account for the fact that one can not even buy partial shares of stock or ETF than it further gets off from the idealized result.) Am I correct here or I don't understand something?
2. Hi Daniel. You certainly can change the model from trading long to trading short. Columns PT Price, SL Price, Trade Running and Capital will need to be amended. They will need to be changed to check the Low Price for the profit target and the High Price for the Stop-Loss. If you are interested I have just released a course in ebook format in the Kindle Store. This course deals with long and short models and goes through step-by-step how they are built.
3. Hi Mark, would you know which parameters to change to go short based on the same histogram going from negative to positive? I've been trying to figure that out, but it seems a little difficult after a few days of trying.
4. If I'm understanding you correctly, you're wanting to backtest a relatively young ETF for a period greater than it's existence. If that's true then you usually need to backtest a similarly managed Mutual Fund. It won't be exact but it's probably as close as you'll be able to get.
5. Dear Mark How could I go on back testing a long/short strategy for 5 years when it has been runing for only 2 years using as a benchmark i.e the SP500 on weekly time frame? you feedback will be very much appreciated. Best . Sakis