Josiah Stewart backtests day trading strategies over at least 90 days using TradingView and FX Replay, journaling every trade to find what causes losses. He refines the rules, backtests again on 250 trades, then forward-tests live on a small account for 30 days before scaling up with real money.
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I've created 7 insanely profitable strategies that have helped thousands of people make money day trading. In this video, I'm going to break down exactly how I found them, tested them, optimized them to make them into what they are today. So we all know that psychology is extremely important for trading, but without the proper strategy, psychology is completely pointless. You need to have an edge in the market that allows you to have an upper hand in the market so that the decisions that you make and the setups that you take will ultimately win in the long term. That's why I focus heavily on finding, testing, optimizing, creating the best strategies ever. The beginning of my trading journey— keep in mind, I've been trading for over 7 years now. So back in 2017, when I was first starting off, I was obsessing on the charts. I'm talking about I was spending 10, 12, 15, 16 hours straight looking at the charts. You can literally ask anybody around me, I was absolutely glued to it. It was disgustingly bad, I'm not gonna lie. It was getting to the point where I would literally go to sleep, I'd close my eyes, and I'd see candlesticks. I'm talking about I would look up at the clouds and I'd see candlesticks. I'd look anywhere on walls and I'd see candlesticks because that's all my eyes were used to seeing, just because I was putting a ridiculous amount of time on the charts trying to master this skill that I saw other people making $10,000, $20,000, $30,000, $50,000 with. And after spending all that time on the charts, you start to notice a lot of patterns. All profitable trading is, and finding a profitable strategy, all you have to do is find the pattern. Price action is all about looking for patterns and entering when you see the right criteria that shows that the pattern might repeat itself. As these hours were literally passing by, I'd notice all these patterns, and when I would notice them, I kind of write down exactly what I saw. When I'd write down what I saw, I'd then go and backtest if that thing continued to happen over a long period of time. A long period of time for me is more than 3 months because the market can go in these cycles where it's good for a month, a strategy could be great for 2 weeks, 3 weeks, 4 weeks, then the market shifts and the strategy absolutely sucks. So what I would do, I would make sure that that pattern that I saw, that strategy that I was kind of looking at or kind of making up at that point, was actually legit and would work over a long span of time. I didn't want something that would only work for a couple weeks. I wanted to find an edge in the market that would continue to be an edge in the market. Now obviously these edges as they go, or these strategies as people like to call them, are going to have to be changed and optimized in different market conditions. We all know we have consolidating markets, we which is when markets just go straight up, down, up, down, up, down, up, down. We have ranging markets, we have trending markets, we have all these different type of markets. So every strategy or edge in the market isn't going to work the same exact way it'd work in a different market. So that's when it comes into the testing and optimization part, which we will get in later in this video. So as I was saying, in the beginning of my journey, I really focused heavily on a strategy 'cause I was really tired of just losing. I really wanted a strategy that I could focus on and actually feel confident building my psychology around this strategy, building my risk management around this strategy, and I just felt like I could not find it. So that's when I decided to actually hone in and figure out a strategic plan to create, formulate, optimize, and better any strategy. And that's exactly what I'm going to be sharing with you guys today. So the first step is finding the pattern. Now obviously you guys can watch YouTube videos, you guys can see strategies on TikTok, on Instagram Reels, wherever you see other people trading. You can either take a strategy from them, or you can kind of go in the trenches like I was doing in the beginning of my journey by spending an insane amount of time on the charts until you notice certain patterns, whether that price does something at this time of day, or after this happens, price does this, or this happens the day before, this happens the next day, whatever those patterns are. You can either go through that route. We just need a base for our strategy that we're going to build. So after you've either taken someone else's strategy that you're ready to optimize for your personal trading goals, or you found a pattern in the charts from watching the charts for a stupid amount of time, now it's time to get on to the testing phase of it. So my testing phase and how I like to go about it is look over the past 90 days. Go over the past 90 days with that same pattern that you saw, that same strategy that you saw, and backtest it. There's a backtesting feature on TradingView, but there's also another platform that I personally like called FX Replay. I think you can get like a 5-day free trial or something like that. I don't know, just go to their website, it'll probably be like a 5-day free trial or whatever, or pay for the monthly thingy. It'll drastically help you out. Honestly, FX Replay is an absolute killer. I'm not sponsored by them, they don't pay me or nothing like that, they just have helped me drastically when it comes to making these profitable strategies. So as you're backtesting this strategy, whatever that strategy is— let's say it's a break and retest on the 3-minute time frame and you only go for a 2:1 risk-to-reward ratio, whatever your strategy is, and you backtest it 90 times— as backtesting. Make sure you're journaling the trades. So what I mean by that is you want to track when you had a winning trade, track when you had a losing trade, track when there was no setup at all that day. Also, you want to track other small metrics like was there news that day, or is there any heavy news coming up in the following days. And once you have all that, obviously write the risk-reward ratio of that trade, right? If you're always going for a 2:1 risk-reward ratio, if you're always going for the last high, Last low, last low, whatever it is for you. But once you have that, you also need to write what I like to call is just why I won or why I lost phrases. And that's just gonna help you out in the optimization process of all of this. Now, an example of what this looks like in real time would be writing down if you took buys or sells, writing down if you won or lost, what was your risk to reward ratio, if there was any news that day, and then writing a small note. Like for instance, if you had lost a trade, This trade went halfway to take profit before reversing and taking me out the trade. Or as soon as it hit take profit, end up going for another 2:1 risk-reward ratio so I could have held it longer. Or I think I lost this trade because there was low volume that day. Or I think I won this trade because this, this, and this happened. Or it was above the VWAP this time, or below the moving average. Whatever it is, just write small little trinkets, because what you'll start to notice after taking those 90 trades in your testing phase, you'll start seeing patterns. You'll start seeing, okay, all my— 30% of my losing trades are because there's low volume. So maybe if I just don't trade when there's low volume, I cannot give away as much money. Or 50% of my winner trades is because it wasn't a news day, or there was no huge news event going on that day. Market open was bullish, or market open was bearish, and I traded in the direction of market open or market close, whatever it is, right? Just Write these small things because then after you're looking over your data, you're going to need that. Because in the optimization process, we're going to take all the notes that you have— the wins, the losses, the buys, the sells, the indicators you use, news days, not news days, whatever all that is— then we're just going to take that knowledge, backtest another 90 days with the new key points, ignoring the news days, ignoring the low volume days, ignoring the times when Price did this, this, and this, whatever you're seeing in your testing phase. You're going to backtest another 90 days of that and see how the results are for that, doing the same thing with journaling your wins, your losses, the direction it was, whether it was buys or sells, news days, not news days, whatever it is, right? So at that point, you've tested it, then you've optimized it and tested the optimized version of it. Now that optimization is part 1 of the optimization. Optimization just based off of the notes that you took. The second optimization is going based off of scrolling back on the backtesting, seeing your trades, and you're able to actually see patterns in your winning and patterns in your losing trades. For example, let's say every time you enter, if the candlestick after you enter goes against you, 80% of the time you end up losing the trade regardless if it took you out on that candlestick or not. So it just makes sense moving forward for you to cut your losses if the candlestick after you entered, you ended up losing 80% of those trades. If the candlestick after you entered was going against you. You'll just be able to see these small patterns while actually looking at the charts and looking over the 90 trades that you actually took. You're able to visually see, okay, 80% of my trades went past a 2:1 risk-to-reward ratio, so it makes sense and I can make more money in the long term if I hold it to a 2.5 risk-to-reward ratio or a 3 risk-to-reward ratio, or if I throw a trailing stop loss on when it reaches my 2:1 risk-to-reward ratio, or whatever rules you have set as far as your take profits and your stop loss. It's extremely important not just to go over the written optimization results, the written journaling results that you have when you wrote down your buy, sells, all that different type of stuff, but also looking over it on the charts and seeing patterns in your winning trades, patterns in your losing trades that can help you not give as much money back on your losing trades and help you maximize and capitalize on more money when your trades do win. Now once you've done that and now you're kind of starting with a whole new optimized version of your strategy, then this is the time to backtest heavily. This is where I like to say we get at least 250 trades with the optimized version of your strategy. Keep in mind, while you're doing this, you still need to be journaling. You still need to be writing down why you think you won or lost it, if it was sells, buys, whatever it is. And keep in mind, you can journal this— I have just a notepad. I used to just write it down in my Notes phone, um, or the app on my phone. You can also use, if you're on a MacBook, Notes app, or there's no— this notebook thingy on Microsoft that I'll use sometimes. Some people use spreadsheets. I don't know how to freaking use spreadsheets, so I don't use spreadsheets, but it's completely up to you. You don't have to use a super complicated software or something like that. Just have it written down somewhere. So once you've backtested those 250 trades, now it's time to take it on the live market. So when you're happy with those results, let's say you traded the optimized version and you had a 67% win rate, average 3:1 risk-to-reward ratio, whatever it is, right? And you're happy with those results, now it's time to take it to the live market. Because backtesting, as some of you probably know, can be a little bit misleading because you're not dealing with the emotions of being in the live environment. You're not moving as fast. You kind of get to pause the backtesting when you want to. You can get your perfect entries or whatever. So we can't just go based off of our backtesting results. Now we need to forward test it. This is one of the most important parts of the strategy, and how I personally like to do it is we take 30 days and we trade this either on a super small live account or on a demo account. I recommend a live account. I'm gonna be honest, because of the fact that on a demo account things can be messed up as well. You're not gonna have your psychology tied to it. So that's why I say on a small live account, risking a small amount of money per trade. We just want to see this work in the real world. I don't want you guys out here loading up a million dollar account and placing freaking 2,000 contracts on your new strategy just because the back testing results seem promising. You need to test in the live markets first. That's what we're doing right now in the Inner Circle. I have a new strategy that I've literally just come out with. It's an absolute killer on YM, super fast strategy. I'm not gonna lie, we've been, uh, front testing it, forward testing it live every single morning in the Inner Circle for the past week or so, and we haven't lost a single trade. It's actually been performing better than my back testing results, and I shared all that results with my Inner Circle and everything like that. But this is currently where we're in the phase of with this new strategy that I might end up releasing soon if the forward testing goes good. On a side note, if you guys want to get access to the Inner Circle, you guys can click the link inside the description down below. Inner Circle comes with everything you personally need to become a profitable trader. We're live every single morning trading, going over the charts, answering questions, also in the charts all the time. Also, we have an exclusive Discord where we're in there all the time answering questions. We have a bunch of different coaches. We have a dedicated trading psychologist. You get access to all of my trades, all of the coaches' trades, so you can take all of our trades. You get access to all my courses as well. You, like I said, get everything you need to become a consistently profitable trader. And that's why spots are always filled in my Inner Circle. But I always like to open up spots when a new video comes out, so I suggest you click the link in the description down below now to secure your spot in the Inner Circle. And like I said, you guys will be able to live test and forward test this strategy with us as we're going through the journey right now. So after you've done your forward testing of this strategy for at least 30 days, Now it's time to go over that data. Like I said, we need to journal that data as well. Wins, losses, why you think you won or lost the trade, the direction it was going in, that kind of stuff. Because now we need to optimize the, the live version of that strategy, the forward-tested version of that strategy. Look over that data, optimize it, and then at that point, if you're comfortable with the results after the live forward testing of it, then you can start trading it normally. That's how I personally like to go about it. But that's pretty much it. It's a simple process where you start off with finding the strategy first, then testing the strategy. Then you're going to optimize it based off of the words that you've written down, optimize it based off of the charts that you're seeing your trades on. Then you're going to forward test it, and then you're going to optimize the forward testing. Then you go live and make millions of dollars. And that step-by-step process is the exact thing I've done over 8 times now to find all of these extremely profitable strategies that I've shared with you guys on YouTube, inside my courses, inside my inner circle, no matter where it is, they've all went through that same kind of strenuous— I want to say workout, but it's not workout, whatever the heck the word is— they've all went through that same system, I should say, for me to be able to publicly and confidently share those strategies for other people to make money day trading. Now it's also extremely important as you go live with it, let's say it's fully tested, fully optimized, whatever, you're actually live trading your normal contract size, lot size, whatever it is, that you continue to journal. Because as time goes on, you'll get more and more data. Instead of you having just the first 30 days of forward testing and then the second 30 days of forward testing, you'll notice and look back and be able to see, okay, I have 180 days worth of data here. Let me look over this and see how I can optimize this even more. All about optimizing these strategies to cut your losses shorter and help your winners run longer. When you get to the live markets, it makes it a lot easier to journal your trades because you can actually use platforms versus like on when you're backtesting your strategy, you can't really use platforms for that. But there there are websites for actually forward testing where you're actually live trading and it's tracking all the metrics for you. I'll tell you guys which one I use. It's the link for inside description down below. It's called wagmetrader.com. Absolutely smooth platform, nothing but love for it. But that's about it. That's exactly how I find these extremely profitable strategies that you guys see and use and send me screenshots of you making thousands of dollars using. That's how I do it. I just gave you all the sauce completely for free. We're literally doing this live right now every single day inside the Inner Circle where we're front testing this strategy been absolutely killing it so far. This is probably my most fire strategies I've probably ever come up with. I, um, I'm thoroughly enjoying it. It moves very fast. I'm talking about you'll be in and out the trade in like a minute or 2 minutes, but you could be up $1,000, up $2,000, up $5,000, $10,000 in a matter of 1 to 2 minutes, which is absolutely insane. We're doing that inside the Inner Circle live. If you guys want to be able to join and be part of that, click the link inside the description down below, secure yourself a spot in the Inner Circle. Like I said, it's literally always full. There's probably people inside my comments right now that's like, oh, it's always booked out, whatever, whatever. If you go to any of my other videos, it's literally always booked up. I don't make this stuff up, I promise y'all, it's always booked. So hurry if you can, click the link inside description down below to join the inner circle. If you guys enjoyed this video, I highly suggest you watch this video right here. This video I broke down exactly how to draw the perfect support and resistance zones. This will stop you from getting wicked out, this will stop you from drawing the wrong zones and ultimately losing a bunch of trades. So I'll see you in this video.
