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Day Ten

 Alright, time for some brutal honesty on the algo trading journey. You know how in my last post, I talked about scaling back my backtesting to focus on just US news releases on EUR/USD? Well, I took my own advice, doubled down on the manual testing, and the results are in.

And, wow.

My strategy SUCKS!

Seriously, it's been a real dose of humble pie.

The Unforgiving Truth of Focused Backtesting

I picked 6 key US news releases between April 29th, 2025, and May 7th, 2025, for my targeted manual backtesting. These were high-impact events that, in theory, my news straddle strategy should have capitalized on.

The result? All 6 trades would have stopped out at a 10-pip loss. Every single one. That's a perfect losing streak in under two weeks of market data.

Then, just to get an even fresher perspective, I also manually backtested using TradingView for the last week of May 2025. (Quick side note: TradingView's replay feature is so much better for manual backtesting than what I was using on TradingStation – a huge quality of life improvement!). And the results there? Three more trades, and they were also shocking! More losses, more clear evidence that my current strategy, as is, simply isn't cutting it.

Why This is Actually Good News

Now, you might think this is discouraging. And honestly, for a moment, it is. There's a natural inclination to feel a bit dejected when something you've put effort into building proves ineffective.

But here's the crucial mindset shift: this is actually fantastic news!

  1. I Found Out NOW: Imagine if I had somehow managed to automate this strategy and put real money on the line without this rigorous manual testing. Those 10-pip losses would be real losses. Discovering these flaws now, in the backtesting phase, costs me nothing but time and a bruised ego.
  2. Specific Flaws Revealed: Because I narrowed down my testing focus, I'm getting crystal clear data on why it's failing. It's not a vague "it just doesn't work." I can see exactly where the stops are being hit, how the price reacts around the news, and what kind of market conditions are consistently wiping me out.
  3. Iteration is Key: This isn't a failure; it's data. It means my hypothesis about how news straddles work needs a serious re-evaluation. It forces me back to the drawing board, not to give up, but to refine, rethink, and improve. My previous post talked about needing to refine; this past week's testing has given me a very loud and clear message about what needs refining.

This is the grind of algo trading. It's not about building one perfect strategy; it's about constant iteration, testing, and learning from failure. My news straddle strategy isn't dead; it's just entered a very necessary, very painful, but ultimately very valuable, redesign phase.

Has your backtesting ever given you such a harsh, but necessary, reality check? Share your stories of strategy humbling in the comments!

Happy (and now more informed) algo trading,

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