This week we take a light hearted yet serious look at what it means to have an ‘edge’. In the natural world animals develop skills and characteristics that allow them to prosper and survive often under strange and adverse conditions. This process of evolution gives those that develop these skills a survival advantage over those…
Over the past 7 weeks we have had a detailed look at the steps and processes involved in trading system design and development. Briefly recapping, these steps are:- Step 1 – Developing a Traders Mindset, and accepting that losses are just a part of the business. Step 2 – Identifying the tools and resources needed…
In this week’s posting I would like to explore in more detail the concepts of degrees of freedom and optimisation and the impact these two variables can have on the development and outcomes of a trading system. Degrees of freedom in a trading system relates to the number of criteria that are used to filter…
Having worked through the processes to either develop and test your own trading system or perform detailed due diligence on a commercially available trading system using the steps discussed over the past weeks, this week we will look at what constitutes a winning trading system. A winning trading system will give you a profitable ‘edge’…
Having researched and designed your trading system by working through the steps we have discussed so far it is now time to back-test your ideas to see if the system ‘works. Research is conducted via back-testing concepts against available historical data. This is where your programming skills are required, unless you wish to conduct your…
