Introduction

Backtesting is known to be one of the effective ways to access the viability of a trading strategy in predicting the actual results of the share price by applying the trading strategy to historical data. Without a proper tool, backtesting will take ages to be completed, as historical data up to 5 years and above has to be analysed in order to obtain an accurate result. MQ Backtesting is an integrative and comprehensive feature which ultilises high technology to carry out backtesting within seconds. In this blog post, we will be demonstrating how powerful MQ Backtesting is in quantifying the signal quality.

To understand this topic better, please read MQ Trader – How to quantify signal quality with MQ Backtesting?  [HENGYUAN] (Part 1)

Company Background

HENGYUAN is engaged in refining and manufacturing of petroleum products in Malaysia. On the beginning of October 2018, the rising of Brent crude oil price acts as a positive catalyst to most of the oil and gas companies’ share price.

EMA 5 Crossover Daily Chart

Source: MQ Trader Stock Analysis System

A buy signal was observed on 1 Oct 2018 when EMA 5 Crossover is applied on daily technical chart of HENGYUAN. To confirm the signal’s quality, MQ Backtesting was used to verify the accuracy of the signal.

Source: MQ Trader Stock Analysis System

Source: MQ Trader Stock Analysis System

Background

MQ Signal Backtest service performed Live Backtesting on stock HENGYUAN (4324) based on EMA 5 Crossover Trade Signal and Daily chart duration. Up to 5 years historical data were used for this Live backtesting service.

Test Result

A total of 15 Trade Signals were analyzed. The latest Trade Signal was detected on 03/10/2018. On average, the Backtest result shows that the best performance is achieved on T+1 after trading day with 33% success rate.

Overall, this Trade Signal achieved a MQ Signal Backtest Rating of 0.0/5 stars. This represents a Below Average rating. Traders may wait for other confirmation signals of another chart’s duration, or look for other trade opportunities.

ADX Crossover Daily Chart

Source: MQ Trader Stock Analysis System

A buy signal was observed on 2 Oct 2018 when ADX Crossover is applied on daily technical chart of HENGYUAN. To confirm the signal’s quality, MQ Backtesting was used to verify the accuracy of the signal.

Source: MQ Trader Stock Analysis System

Source: MQ Trader Stock Analysis System

Background

MQ Signal Backtest service performed Live Backtesting on stock HENGYUAN (4324) based on ADX Crossover Trade Signal and Daily chart duration. Up to 5 years historical data were used for this Live backtesting service.

Test Result

A total of 15 Trade Signals were analyzed. The latest Trade Signal was detected on 02/10/2018. On average, the Backtest result shows that the best performance is achieved on T+5 after trading day with 66% success rate.

Overall, this Trade Signal achieved a MQ Signal Backtest Rating of 1.3/5 stars. This represents a Below Average rating. Traders may wait for other confirmation signals of another chart’s duration, or look for other trade opportunities

Conclusion

MQ Backtesting on both EMA5 Crossover and ADX Crossover daily charts proves that the buy signal which appeared on 2 Oct 2018 is not strong.  Eventually, the share price of HENGYUAN did not rise sharply within T+10 indicating how reliable MQ Backtesting is to identify the quality of the signals.

There are a lot of buy signals can be observed from the technical charts but not all of them produce high capital gain with high success rate. Hence, MQ Backtesting plays an important role to eliminate the false signals in increasing the winning chance of our investment.

MQ Trader Workshop

For those who are interested in MQ backtesting, you can visit MQ Trader Workshop - Budget 2019 Outlook & Backtesting With MQ Trader [Free Registration!] to know more about our coming workshop on 14 November 2018. 

*Note: 300 MQ Points will be given away in the workshop!

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We encourage traders to try out and evaluate the MQ Trader system and provide us feedback on the features you like to see in the system. We have received many positive feedbacks so far, and we are currently compiling and reviewing them for possible inclusion into the next release of the system.

We would like to develop this system based on community feedback to cater for community needs. Thanks to all those who have provided valuable feedback to us. Keep those feedbacks coming in!

Disclaimer

This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

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