Maximizing Profits with Python Backtesting: Price Breakout Strategy & Dynamic Trade Management

A comprehensive guide on backtesting a price breakout strategy using Python and maximizing profits through dynamic trade management. We'll explore different approaches that can boost your profits from 10% to almost 100%.
We'll be applying our strategy to both manual and algorithmic trading. Even if you're not into algorithmic trading, you can still utilize the insights from our backtest for your manual trading strategies.
In this video, we'll revisit an indicator presented in a previous video, looking for key support or resistance levels where the price has bounced three times before breaking through. We'll use the moving average to determine the trend direction.
We'll also discuss various trade management rules, including stop loss (SL) and target profit (TP) conditions. We'll explore a dynamic approach using the Relative Strength Index (RSI) and a method that uses a stop loss value as a percentage of the price value.
💲 Discount Coupon for My Udemy course on Algorithmic Trading:
bit.ly/CouponA...
🔥Download the Python notebook used in this video from the link below.
drive.google.c...
The Data file in case needed:
drive.google.c...
Remember, the goal here is to highlight the power of trade management while backtesting our breakout indicator. You can apply these results to your manual or algorithmic trading.
#python #backtesting #technicalanalysis BreakoutStrategy #trademanagement #algorithmictrading #breakouttrading #rsi

[@precioslouzado8651]

Awesome. I love the education you are providing for every segment of the code. Thanks and much appreciated.

[@CodeTradingCafe]

Glad it's of help! Thank you for your comment.

[@enotbert]

That's a great approach. I haven't gotten around to experimenting with the code yet, but the first place to dig is to increase the frequency of trades. 13 trades in a 5000+ day period is very rare. If you increase that number, it's likely that the all important temporal metrics will also change for the better. I will start by selecting the values responsible for the signals. If I manage to find interesting combinations of variables, I'll update you.

[@CodeTradingCafe]

Hi, thank you. Just in case the frequency is not easy to increase we might as well run the same algo on different currencies... one way of increasing the trades number. Good luck!

[@enotbert]

@@CodeTradingCafe Thanks. Can you please advise the logic on how to define zone_width. Maybe there are some statistical methods or is it a purely empirical approach?

[@CodeTradingCafe]

For now purely empirical, if you want to kind of automate I would say use something related to ATR.

[@칠월이십삼일]

Then how about using 1h or 4h?

[@trocchiettoski]

@@CodeTradingCafe yeah i have been using zone_width and is really not good because applying to stocks growing with price will have a difference between high-mean always bigger than 0,001, and the same with another constant

[@LolkeDijkstra]

I tried to replicate the exact same results and found that you were using a gap window of 6 equal to the pivot window. That would do the trick. But of course you should have increased the gap.

[@CodeTradingCafe]

Hi, glad it works. Regarding the gap not necessarily check the edge conditions, in python the right edge of a slice is automatically excluded.

[@coati3019]

Hello Dr. In the sell orders you have to use two different tp values instead of tp1 (for now you have two identical sell orders). Maybe this will increase win ratio of this strategy.

[@CodeTradingCafe]

Hi, you're absolutely right, I missed this! might be worth you trying it see if it improves our results. Thank you for pointing this out!

[@ericchen161]

Really good strategy, clear coding logics and well organized walking through!! Appreciate it!

[@CodeTradingCafe]

Glad you enjoyed it! Thank you for your support.

[@nandoribas]

Best code/trading channel on KZbin, amazing content, explanations and examples. Congratz!

[@CodeTradingCafe]

Thank you for your support! Glad these videos are helpful.

[@lennard4454]

Hi, I've wanted to make a suggestion. I've followed you for quite some time and a coded a bunch of stuff my self. Lately I've gotten really interest in using code to improve manual trading by detecting common chart patterns. I've noticed that doing it with classic code, for me just doesn't work very well, especially with the live market where it doesn't have as many candles to look into the future. I think a way better approach would be using ai. This what today's ai is good at, not predict tomorrows price. Maybe you could use ai in the future again... Thx for reading.

[@CodeTradingCafe]

Hi, thank you, which AI algos you have in mind?

[@lennard4454]

​@@CodeTradingCafe I've done some work on this problem. It is a very complicated topic and I didn't find good solution on the internet. So I've developed my own for a simplified version of this problem for now. I've defined the problem as following: Given a time series where each value depends on the values before, one needs to find a pattern that varies in length at may occur at any index (n times). For simplification, I've stacked sinus waves with different wave length and choose the subsequence from each low to each high as my pattern. I've send you en email to the notebook because KZbin won't allows links here.

[@bentz242]

when apply this tests on stocks e.g. AAPL the test dataframe always empty, any idea how to resolve it ?

[@CodeTradingCafe]

Yes all the parameters variables values can be changed to fit the new asset price, these were set in the example for EUR USD.

[@dcchase8225]

How can i apply in Indian capital Markets?

[@CodeTradingCafe]

you need to get the data for any market you need and adjust the parameters for this market, check the results.

[@hamidsavalanpour4277]

This code doesnt work with live data using stocks. Tried it with spy and it got only 1 trade for the last 5 years. Can you make your future videos with live data?

[@CodeTradingCafe]

Hi, I don't understand you used it on live data for the last 5 years? you need to tune the parameters depending on the asset you are trading. It doesn't matter if data is live or historical.

[@Ezio-uh4uy]

This strategy is good for forex.

[@CodeTradingCafe]

Hopefully it wan't disappoint, some strategies suddenly mess up!

[@_romulus4336]

where is the backtesting folder

[@CodeTradingCafe]

Hi, check the google drive link in the description.

[@Qstgggg]

Do the same backtest only for a minute timeframe

[@CodeTradingCafe]

I can do it but 1 minute timeframe is too noisy for algos like this one, but again we can try it, nothing to loose.

[@rafaelsarmentero]

This is not profitable.

[@CodeTradingCafe]

On its own no, but it can be a part of a full trading system.

[@neuvedeno1]

Has anyone made it work with crypto?

[@CodeTradingCafe]

Not me, not yet at least :)

[@veerjain4537]

Gotta say your channel is truly amazing was wandering in some event based backtesters, then got this video in my feed, saw your whole channel every single of your video is gold for me. I have started from the last video day before yesterday now I'm at 5th from the down, in a month or two will watch this video. Truly genuine and amazing content, hats off to you sir. Thankyou for this valuable content. P.S. I saw some comment about your udemy course can you drop the link of that? Thanks :D

[@CodeTradingCafe]

Thanks a lot for your appreciation, I am glad these videos are of help. (the course link is here www.udemy.com/course/algorithmic-trading-strategies-in-python/?couponCode=BA93A8F7375DB35B1252) Just in case the voucher expires let me know I can generate a new one to avoid you paying a full price.

[@saabsaab3774]

very genuine channel salute

[@CodeTradingCafe]

Thank you for your support!

[@RichardPain3]

Hello Dr. Just stumbled accross the channel. Exactly what I am looking for. Just got your Udemy course and subbed. Thx for putting this info out there.

[@CodeTradingCafe]

Awesome, thank you for your support!

[@amberneeltalksonfacts]

Hello Sir, can apply this Breakout Strategy for Finvasia Shoonya Broker Api Indian Broker, for Live Trading

[@CodeTradingCafe]

Hi, I honestly don't have experience with Indian brokers but you can always try to open a demo/free account and see if there is a way to automate your strategies, worst case it simply wouldn't work.

[@amberneeltalksonfacts]

@@CodeTradingCafe ohh great thanks for your reply sir,

[@amberneeltalksonfacts]

@@CodeTradingCafe actually people don't reply idk why but you did so thanks 🙏

[@amberneeltalksonfacts]

@@CodeTradingCafe btw sir can you give any resistance breakout python code so that I can try to run with my broker, if any plz 🙏

[@CodeTradingCafe]

The code is available from the link in the description of the video you can download it

[@Ccccccc109]

Thanks you for Your work! Where do you find the csv files please?

[@CodeTradingCafe]

Thank you for your support, the data files are in the description

[@Exzal123]

It's weird... I've got my dataframe with my signal showing 1 or 0. I use your backtesting code, and in order to see if it was working for the conditions I've put some print that gave the right outputs : if self.signal!=0 and len(self.trades)==0 and self.data.Signal_Achat==1: sl = self.data.Stoploss[-1] print("SL", sl) sldiff = abs(sl-self.data.Close[-1]) tp = self.data.Close[-1]+sldiff*TPSLRatio print("ENTRY", self.data.Close[-1]) print("TP", tp) print("") self.buy(sl=sl, tp=tp, size=100000) But when I print(stats) I get only NaN and 0 values... I don't know if this is common? Thanks !

[@CodeTradingCafe]

Hi, there might be something preventing your bot from passing trades, so the print is happening but no trade is opened, example reasons: trade size is too high there is not enough money in the account, sl and tp values are too close to the price or not in the good order, ... just verify your numbers.

[@davidsaurel4012]

Cooo

[@CodeTradingCafe]

Thank you :)

[@Thiarara_superWP]

hello, some of us are new to this, take us step to step on how to run this and make it work.

[@CodeTradingCafe]

Hi, this channel is also for new to coding, my main purpose is education. To refresh your python skills, I would start by this playlist kzbin.info/aero/PLwEOixRFAUxZVV0XNWlapem1yoRA4rt_O Then carry on with these videos on strategies. Good luck!

[@mohammedmansour8181]

This video is nice to refresh python and learn trading in the same time 😊

[@CodeTradingCafe]

Glad you liked it Thank you for your support.

[@Alexrmacleod]

Legend walks among us

[@CodeTradingCafe]

Lol ! thank you for your support :)

[@The_Foolish_Fool]

Been looking at this and it's exactly what I was needing. now only if I could find a way to incorporate S&R levels.

[@CodeTradingCafe]

I am glad it's helpful, check this one for S & R kzbin.info/www/bejne/rpzcZI2feNh4etU

[@The_Foolish_Fool]

@@CodeTradingCafe I've tried adapting your code to work with a SPY dataset I've gotten from Kaggle (it's the most up to date one I could find and it also has the most data points going back to the 1970's) and I can't seem to get the backtesting to work. it doesn't output any trades.

[@AchuVlogs]

Please create video on implementing central pivot range (CPR) indicator.

[@CodeTradingCafe]

Thank you for the idea, I never used it before, might research how to beforehand.

[@AchuVlogs]

@@CodeTradingCafe Its a leading indicator used for day trade, calculated based on previous day's data. Sure, looking forward :)

[@secretsmile9219]

hey you can try camarilla pivot points daily R3 R4 + S3 + S4 these levels are most important S/R @@CodeTradingCafe

[@dmitriys4279]

13 trades???

[@CodeTradingCafe]

well it depends on the parameters and how selective you want the model to be, also the timeframe... but the algorithm is working.

[@usikalal7279]

File Donot downloading

[@CodeTradingCafe]

All the files are OK I checked these you need to click the download button after the google drive page is opened.

[@newbienoob1]

sir do you have github repository ?

[@CodeTradingCafe]

I didn't push these codes on github unfortunately, must do it at some point.

[@newbienoob1]

@@CodeTradingCafe thank you sir for free content it really helped me god bless you 🙏🙏🙏🤲🤲

[@kingsleyonyenanu9272]

Hello Mr. Code Trading.. how can I connect with you outside here… maybe Facebook,Twitter or telegram???

[@CodeTradingCafe]

Hi, thank you for our interest, the best is either on KZbin or by email.

[@kingsleyonyenanu9272]

@@CodeTradingCafe okay, I would like to have your email.

[@CodeTradingCafe]

It's in the about section of this channel, sorry can't share it here I think YT will automatically remove the message