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For backtesting, we used realistic initial data for entering trades, such as:
  • Starting balance: $1000
  • Commission: 0.01%
  • Risk per trade: 1%
To ensure realistic data, we used the above settings. We offer two methods for calculating your order size, and in our case, we used a 1% risk per trade. Here’s what it means: Risk per trade: This is the maximum loss from your deposit if the trade goes against you. The trade volume can change depending on your stop-loss distance from the entry point. Here’s the formula we use to calculate the possible volume for a single trade:
  1. quantity = percentage_risk_balance/loss_per_1_contract (incl. fee)
Then, we calculate the maximum allowed volume based on the specified maximum leverage:
  1. max_quantity = maxLeverage_balance/entry_price
  2. If quantity < max_quantity, meaning the leverage is less than the maximum allowed, we keep quantity. If quantity > max_quantity, we use max_quantity (the maximum allowed volume according to the set leverage).
This way, depending on the stop-loss distance, the position size can vary and be up to 100% of your deposit, but the loss in each trade will not exceed the set percentage, which in our case is 1% for this backtest. This is a standard risk calculation method based on your stop-loss distance. 🔸 Statistical Significance of Trade Data In our strategy, you may notice there weren’t enough trades to form statistically significant data. This is inherent to the Smart Money Concept (SMC) strategy, where the focus is not on the number of trades but rather on the risk-to-reward ratio per trade. In SMC strategies, it’s crucial to avoid taking numerous uncertain setups and instead perform a comprehensive analysis of the market situation. Therefore, our strategy results show fewer than 100 trades. It’s important to understand that this small sample size isn’t statistically significant and shouldn’t be relied upon for strategy analysis. Backtesting with a small number of trades should not be used to draw conclusions about the effectiveness of a strategy. 🔸 Versatile Use Cases The methods of using this indicator are numerous, ranging from identifying potentially the best-performing order blocks on the chart to creating a comprehensive trading strategy based on the data provided by our indicator. We believe that every trader will find a valuable application for this tool, enhancing their entry and exit points in trades. Disclaimer Past performance is not indicative of future results. The results shown by this indicator do not guarantee similar outcomes in the future. Use this tool as part of a comprehensive trading strategy, considering all market conditions and risks.