TrendAnalyzer's History Simulation graphically represents the theoretical profit or loss (displayed on the y-axis) across different numbers of trend changes (x-axis).
By adjusting trend settings parameters such as Candle Interval and Number of Candles, a trader can visually explore how different settings might have impacted past performance, informing decisions on how to set these parameters for future trading. This tool aims to help optimize strategy by simulating past market behavior.
The blue diamond on the graph represents the specific data point that provides detailed information about the performance for your current set of parameters.
The orange dots on the graph represent data points with slightly changed parameters in comparison to the blue diamond and are generated by the indicator.
Hovering over orange or the blue symbols display a tooltip that includes information such as the exact theoretical profit or loss in pips/ticks for that number of trend changes, the specific number of the trend change that the history simulation has calculated for this data point. It also provides the settings you could use for your Trend configuration to have the best possible Trend settings.
The backtest duration in a history simulation, such as the one in the TrendAnalyzer, is the length of time over which the backtest data is run to calculate the potential performance of the trading strategy. It can be adjusted to test the strategy over different historical time frames to assess its effectiveness.
The provided screenshot from TrendAnalyzer indicates that by setting a higher candle interval and multiplier, a theoretical profit of 131 ticks/pips could have been achieved for the specified financial instrument over the selected backtesting period. These parameters are critical in backtesting to understand how different settings would have performed historically.