Running It: Manual, Coded and Walk-Forward
    Backtesting Mastery
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    Module 17 · Lesson 2 of 3

    Running It: Manual, Coded and Walk-Forward

    16 min readUpdated

    Complete a manual backtest of the EMA Pullback strategy on BTC daily data using a structured spreadsheet.

    Goal

    Run a complete manual backtest of the EMA Pullback setup on historical BTC data, building the skill of systematic, unbiased historical analysis.

    Mistake This Prevents

    Claiming you have "backtested" a strategy after scrolling through charts and mentally counting wins and losses, which introduces hindsight bias and produces unreliable results.

    Manual Backtest: 4-Step Protocol1Write ALL ruleson paper FIRSTBefore opening the chartRule changes mid-testinvalidate all results2Open historicalchart, far leftSet chart to startingdate (3+ years back)Cover future candles3Move candle bycandle forwardApply rules at eachcandle, no peekingahead at future price4Log EVERY qualifyingtrade, wins + lossesDate, entry, exit, RNever skip a loss:cherry-picking is biasWrite ALL rules BEFORE opening the chart: rule changes mid-backtest invalidate every resultA manual backtest with discipline reveals exactly what a coded script tests: the strategy logic, not your hindsight
    A rigorous manual backtest requires four non-negotiable steps: write every rule before opening the chart, start from a date far in the past, advance one candle at a time without peeking forward, and log every qualifying trade including all losses. Skipping or changing steps mid-test destroys validity.

    The Manual Backtest Process

    Setup

    • Strategy: EMA Pullback (Playbook 1)
    • Data: BTC/USDT daily chart, last 3 years
    • Tool: TradingView (scroll-back method) + Google Sheets log

    Step 1: Define Rules Before Looking at Any Data Write the complete entry rules in your spreadsheet BEFORE opening the chart:

    Entry: Daily close above 20 EMA after touching within 1%, RSI(14) ≥ 40, Volume declining for 2+ days
Stop: Swing low of the pullback (or 2× ATR)
TP: Previous swing high
Position Size: 1% risk

    Step 2: Move Through History Systematically

    1. Start 3 years back, and hide all data after that date (TradingView: scroll left)
    2. Move forward one candle at a time (right arrow key)
    3. When entry conditions are met: log the trade
    4. Never look at what happens AFTER the entry before logging it
    5. Apply the rules exactly as written, with no exceptions

    Step 3: The Backtest Spreadsheet Columns: Trade# | Date | Entry | Stop | TP | Exit Type (TP/Stop) | Exit Price | P&L (R multiples) | Notes

    Step 4: Record at Least 30 Trades Continue until 30 qualifying trades are logged. If 3 years does not produce 30 trades, extend to 5 years.

    Step 5: Calculate Results

    • Win rate = wins / total trades
    • Average winner (in R) = average P&L on winning trades
    • Average loser (in R) = average P&L on losing trades (should be ≈ −1R)
    • Profit factor = sum of winning R / sum of losing R
    • Maximum consecutive losses
    The One-Candle-at-a-Time RuleCandle 1Candle 2Candle 3ENTRY??FUTURE CANDLES: HIDDENNo peeking ahead allowedVISIBLE: What you know at candle 3Hindsight tells you where the trade went: discipline requires pretending you do not know
    The most common mistake in manual backtesting is unconsciously using knowledge of future price direction. Moving through history one candle at a time (with future candles hidden) forces decisions based only on information available at that moment, eliminating look-ahead bias.

    Assessment Checklist

    • Rules written in spreadsheet BEFORE opening chart
    • Minimum 30 trades logged
    • No hindsight exits (all exits followed the rules mechanically)
    • All five result metrics calculated

    Common Mistakes

    • Looking at a week's worth of data before deciding to log a trade ("peeking ahead")
    • Adjusting exit rules mid-backtest when results look poor
    • Not counting losing trades that "should have" worked (all exits must follow rules mechanically)

    Fedha Tool Tie-in

    FedhaAcademy's Manual Backtest Template is a pre-formatted Google Sheet with formulas for all five result metrics. It includes a built-in signal checklist that must be completed for each trade before the entry is logged.

    Key takeaways

    What to remember

    1. Write all rules BEFORE opening the chart, because rule changes mid-backtest invalidate results.
    2. Move through history one candle at a time without peeking ahead. This is the only way to eliminate hindsight bias.
    3. Log every qualifying trade, including losing ones, because selective logging produces falsely positive results.
    4. Minimum 30 trades before calculating any statistics.
    Lesson quiz

    Quiz

    Question 1 of 9

    Pass: 7 of 9 correct

    Question 1 of 9

    Why must you write the entry rules in the spreadsheet BEFORE opening the historical chart?

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