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Strategies & Market Trends : Technical Analysis - Beginners
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To: David R. Evans who wrote (4262)4/17/1997 5:54:00 PM
From: SteelBlueIce   of 12039
 
Hi Dave,

This is for newbies, I have system tested more than a thirsty sailor at an Oktoberfest has visited the boys room -g- Just for some balance...

1) Make sure you go over what your software has signaled as a buy or a sell. Often times you think you have written a proper code while the signals generated do not match your intentions. DOUBLE CHECK EACH SIGNAL!

2) Do not forget to backtest your system in ALL types of markets.

3) Does your system generate enough signals to satisfy your trading style? Some systems may only give you a signal every Ash Wednesday and some 3 times a week. Point is that the best money making system may not fit your exposure threshold.

4) If you do like a substantial amount of signals, you will get a higher percentage of loosers. A good system may be 15 out of 25 winners because the winners were twice as profitable as the looser. Great, but do you have the fortitude to stick out that many loosers? What if you get 4 in a row? Will your emotions prevent you from trying it the 5th time? Point here is a mechanical system will take out the emotion ONLY DURING the individual trade BUT NOT over the course of several trades. Think about it.

5) System testing does not take you off the hook as far as your TA education. To write a great system you must know TA. To know TA you must gain some intuition.

6) Ultimately, your profit loss statement IS your system.

Good Luck,
Jerry
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