Trading system-Analyze your trading system

Trading system

I will share with you some of the factors that should be considered when I’m testing and analyzing potential new trading systems. First, you can wonder what I use when developing new systems. There are a number of different software packages available, but most of the time, I am using TradeStation. The following diagram shows a TradeStation summary a system tested. Find in this article for various factors, which we will discuss.

If you do not want to pay for a software package, users can import data from Yahoo! Finance or other data provider into a spreadsheet such as Microsoft Excel program and create data tables to simulate trading. This works as well as the sophisticated software packages, but it is much longer and difficult to configure. (Trading system)

The amount of time you choose is important because you want to scan your system for a variety of market conditions. I usually choose to test launch somewhere around January 1998 and up to the current date for my systems. Thus the system will move strong years and several years in the strong years tested are relatively less.

Net income is probably the first, what to look for, most providers if they want to develop a system. Unfortunately some dealers just look at net income, and that is why I am writing this article. Net profit of course important, but not necessarily is the most important factor. A system can have a huge net benefit was, but if everything that the advantage in a few large operations in the course of the year in 1999 and 2002, is not a good system. You want to ensure that is to develop a system that consistently works well in all market conditions. (Trading system)

Amount of operations and trade length are important, so that you know for sure that would work well with what you are trading the system and browse again also the coherence. If you matched that developing a system of the swing for the actions that probably a few dozen operations per year, which are on their conditions and most of the shops, from 2 to 14 days. If you are developing a business something these other conditions will be different.

Another important factor is profitable in its new trading system percent. Of course assume that of course, that the system that has the largest number of winning trades would be the best. That not always true, but it is. This is where the average gains / loss (average trade divided by trade) comes into play. It is possible to have a high proportion of which have profitable operation, but the average loss could be much higher, then win your average. I’ve seen systems that have up to 85% of their activity, that show a benefit / loss of 0.50, but if the same system has an average of victories which means their losses are to earn on average twice as large as his victories still might not with this system money. But there are also systems, which may be 30% of the time only suitable, but if they have they are right, right, so much and they have a high ratio of profit / loss of 4. 5 or higher and it could actually be able to with making money. Most good trading systems but will typically have a larger than profitable percentage of 50% and a great price / loss continuation 2.0 win.

The last factor we have to consider is the equity curve. This is a consistent trading system test the last. The curve of the actions is just a graphical representation of the usefulness or total loss after each trade. The line a good curve measures should from the left side of the table on the right hand side constantly change. This shows that the system of profit in all market conditions. bad systems even those who the winners are wild Fluxations in the curve of the actions, the enormous capital increases and reductions in capital at the end for a long time or at times to have no movement.

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