[pmoriarty]

Backtesting[1] is really critical when deciding on whether to use a given technical indicator.

I've read too many books and articles, and heard too many anecdotes that make some technical indicator sound fantastic. But until you backtest it (and then forward test it) against a large amount of data, and make sure you're not curve-fitting, I don't think you can have much confidence in it actually working in the real world in the long run (though you may get lucky and have it work for a brief period of time).

For backtesting, the best tool I've found is AmiBroker[2]. It's orders of magnitude faster than any other backtesting tool that I've found, and lets me backtest mountains of data against any indicator I can dream up within seconds or minutes, and then go on to the next one. It's pretty awesome (though kind of quirky in that its programming language is array-based). Anyway, highly recommended.

[1] - https://en.wikipedia.org/wiki/Backtesting

[2] - http://www.amibroker.com/

[cjfont]

Alternatively, you can save your money and use one of the myriad of backtesting tools built into existing trading platforms using a demo account.

[pmoriarty]

Yeah, you can, but they usually suck... especially compared to AmiBroker, in my opinion.