Trader Dale Volume Profile

Backtesting & getting started
In this phase, you should keep a detailed track of results. You want them to be comparable to the
results of Phase 3.
Move to phase 5 only after these 3 conditions are met:
1. You traded using this strategy long enough and with similar results as in phase 3.
2. You trade it flawlessly (you eliminated psychological factors that messed up the trades
and you don't make even the smallest mistakes in trade execution).
3. You made enough money with it that you can psychologically withstand a series of losses
with full trading volumes.
Phase 5: full positions
Now the training is over and it is time to fight! Phase 5 is no longer a "testing" phase. Here you
use my normal trading position size. It happens quite often that when you start this phase you
get few losses right in the beginning (cold shower). You should be prepared for it though and if it
happens you should continue trading with full position sizes. I call it a trial by fire. My experience
is that only if you make it through this – your first real series of losses (with full position sizes) you
are really ready. Withstanding a series of losses is one of the hardest parts of this whole process.
You need to remind yourself – your strategy made it through phases 1-4, your strategy is good
and if you took few losses the strategy is probably having only a bad time. Every strategy has it
from time to time. Only if your strategy is losing in the long-term you should go back to phase 4
and if it doesn't help, move to phase 2 or 3. Don't dump it, just make some adjustments and make
it profitable again.
To sum these five phases up:
Don’t waste too much time and do only a very rough and fast backtest in the beginning.
Do a thorough backtest only after you see that your new idea looks promising.
After you have done your backtest, go straight to trading your idea on a real account.
Increase your position size in three steps.
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