Fair Value Gap
False Breakout Scanner
Heiken Ashi Trend
Stock Volatility Box
Futures Volatility Box
ORB Setups
Squeeze SetupsThe Market Pulse Backtester Preview
In the companion video, we preview a new Market Pulse backtester being built for all Volatility Box members. We use Marathon Petroleum (MPC) as the test case. MPC caught our attention because it transitioned from acceleration (green) to deceleration and then back to acceleration for the first time. An automated script was set to buy 10 shares on a pullback to the Market Pulse line.
The position was underwater at the time of the video, even with the ex-dividend included. The question: how much confidence should you have in this setup? That is where backtesting comes in.
MPC Backtest Results: 5 Years of Data
The backtester enters when the Market Pulse transitions from red (bearish) to green (bullish) and waits for a pullback to the Market Pulse line for a better entry. The exit triggers when the opposite happens: green transitions back to red.
Over the past 5 years on MPC, this strategy produced 9 winners and 4 losers. That is greater than 50%, which is the first checkpoint. The P&L graph showed a positive and steadily rising curve, which is the second checkpoint. These two conditions together are rare. As you explore the backtester, you will find that most stocks do not produce both a positive win rate and a steadily climbing P&L.
Average Winner vs. Average Loser
The average winner on MPC was 22.35%. The average loser was just under 3%. That ratio means you could have seven consecutive losers and one winner would still cover all seven losses. This is the Turtle Trading concept applied to a modern setup: the winners are far larger than the losers.
The original Turtle Traders operated with a sub-50% win rate, which is psychologically difficult. After five losses in a row, most traders cannot force themselves to take the sixth trade. The Market Pulse backtester focuses on setups where the win rate is above 50%, so you are winning more often than losing while still maintaining that favorable winner-to-loser ratio.
Additional Backtester Features
The backtester also shows the average highest move during each trade. For MPC, if you had exited at the highest point every time (which is unrealistic), the average gain would have been approximately 52%. The actual average winner of 22.35% means you are leaving roughly 17 to 20% on the table relative to the peak move. This information helps you set profit targets or trailing stops.
The average duration provides trade planning context. Winners on MPC lasted approximately 67 days on average (a little over two months). Losers lasted about 46 days. This is not a quick trade. You should expect to be in the position for several weeks.
What the Backtester Tells You
Four metrics matter most when evaluating a setup with this backtester:
- Win rate above 50% (MPC: 9 for 13)
- P&L graph positive and rising (MPC: confirmed)
Average winner larger than average loser (MPC: 22.35% vs. under 3%) and average duration that fits your trading timeframe (MPC: 67 days for winners). When all four align on a particular stock, you have a high-confidence setup. The backtester will be available for free to all Volatility Box members as part of the Pro tutorial series.
Frequently Asked Questions
What strategy does the Market Pulse backtester test?
It tests the Market Pulse trend switch: enter long when the Market Pulse transitions from red (bearish) to green (bullish) on a pullback to the Market Pulse line. Exit when green transitions back to red.
How did MPC perform in the backtest?
9 winners and 4 losers over 5 years. Average winner of 22.35% versus average loser of under 3%. The P&L graph was positive and steadily rising.
How is this related to Turtle Trading?
The Turtle Traders won less than 50% of the time but their winners far exceeded losers. This Market Pulse strategy aims for the same favorable winner-to-loser ratio while keeping the win rate above 50%, making it psychologically easier to trade.
How long do trades typically last?
On MPC, winners averaged 67 days (about two months). Losers averaged 46 days. This is a swing/position trade, not a day trade or overnight setup.
Is the Market Pulse backtester available now?
The backtester is being finalized and will be included free for all Volatility Box members as part of the Pro tutorial series.
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