Gold trading basics · Lesson 40 of 54

Gold Backtests: When One Candle Touches Both Stop and Target

Recognize ambiguous intrabar paths and test how fill assumptions affect a gold strategy result.

One Bar, Two Paths: instructional diagram for lesson 40 — CYGURU GOLD · Original lesson schematic. Examples are illustrative.

OHLC does not preserve every event

A candle reports an opening value, an extreme in each direction and a close. It usually does not tell you the order in which all intermediate prices occurred. When both a stop and a target fall inside the bar, that missing sequence can change the simulated result. The problem becomes particularly important when tight levels are tested on long chart intervals.

Construct two paths with the same candle

Imagine a long position already open at 2,000, with stop 1,995 and target 2,010. A later bar opens at 2,000, reaches high 2,012 and low 1,994, then closes at 2,006. A path reaching the high first can hit the target before the stop. A path reaching the low first can do the opposite. Both paths share those four OHLC values, before considering execution costs or gaps.

Read the emulator rather than guessing

Backtest engines impose rules for order timing, price paths, gaps and fills. Read the platform’s documented assumptions and record the settings in the experiment. Lower-timeframe historical detail can reduce some ambiguity where data exists. It does not recreate the full order book, queue position or every live fill. If coverage is incomplete, identify the affected periods instead of treating the entire sample as equally resolved.

Measure sensitivity to unresolved cases

Count trades whose results depend on an unknown sequence. Compare a conservative assumption, the documented default and more granular data where available. If a claimed advantage disappears under plausible alternatives, the evidence is fragile. Do not choose the assumption producing the most attractive curve after seeing the results. Keep gross strategy logic, transaction costs and sequencing assumptions visible as separate components.

Practice task: report a result range

Create three hypothetical ambiguous trades and write both possible outcomes under the stated stop and target rules. Calculate the total under each path assumption. State that this range illustrates uncertainty, not a probability distribution. Return to the same-bar example above and explain why the final close alone cannot tell you which exit was reached first.

Gold Backtests: When One Candle Touches Both Stop and Target

OHLC does not preserve every event

Construct two paths with the same candle

Read the emulator rather than guessing

Measure sensitivity to unresolved cases

Practice task: report a result range

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