Realtime testing Vs Backtesting

Technical Analysis
1

Many times, technical indicators are lagging behind & are only following the price movement.
But I am not getting into that.

I want to ask, suppose you open end of day charts, study the patterns & analyse , backtest different indicators over past time frames.
(Time frames could be 5m, 15m , 30m, 1hr, for 1day , 5days, 1month, 3months, 6months & so forth)

Many indicators, EMA, supertrend, MACD, RSI may seem to work between 70 - 90% of the time during back testing.

But during realtime, price movement changes every tick basis & is recorded as a range on candlesticks patterns. So during realtime chart formation, the indicators are using limited past data alongwith real time ticks as compared to end of day charts.

So realtime calculations done by indicators like EMA, MACD, supertrend may be different or poorer than what is shown at the end of day charts.
Because during real time, the price movement is fluctuating nonstop & so, the indicators when used on end of day charts would get all the data available at stationary position.

2

I agree! I have seen Supertrend indicator changing to Buy-Sell-Buy in a matter of seconds in a live 5 min candlestick chart. This happens because the indicator value is being calculated on a real-time basis using the last tick price as it’s the last closing price for that period (current period).

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3

Understand the overall price action of the scrip you’re trading in, wait for the stock to pan out during the first 1 hour of the markets everyday, see where buyers and sellers are coming in, correlate this to the movement of the previous trading sessions, size your entry quantity in relation to your account capital, use indicators to facilitate your trade entry and exit, maintain stops, exit at your desired target/monetary gain, enter a trade again only if you notice a sure opportunity.

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