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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: shasta23 who wrote (8244)	4/1/1998 2:36:00 AM
From: Richard Estes	Respond to of 12039

System test do not reflect real life and never will. Their main use is to find the optimal system for your mindset by comparing test results between systems. Some items for thought: Use delay 1 day buy at open because you will usually perform scans at night, and the signal sets you up for next day action. Don't use optimization or curve fittings except to get you in the ballpark for periods you might test. Try to obtain at least 5 years of data for tests. Learn to look at test reports beyond just %profit. Be aware of drawdowns,MAE, Time in/out of trade, and the average profit/loss. make sure you test many stocks with the system. Then use "compare" in MSWIN or the ranking of systems in WOW to see if another system beats it. Forget about the buy and hold items except for bragging rights. You are going to place an order to buy a stock 5 year back, Today is when you buy.

To: shasta23 who wrote (8244)	4/1/1998 2:41:00 PM
From: David R. Evans	Read Replies (2) \| Respond to of 12039

Hello All, Always set up your system test to buy on the open of the NEXT DAY! That is reality. The numbers may not be as good but they will be more realistic. Also remember that system test will only give you a guide line... Do not live and die by them. Now if say you are looking at StochRSI(14) and like its test results. You must then start to LOOK at the charts for the REAL entries and exits... There are many times when StochRSI(14) will cross up through 30 but only go up to say 50 or so. It will then drop down under 30 only to cross up through again and finish it's run. Now, in reality would you have stayed in for the entire trip or would you have jumped ship on the first sigh of trouble? Another way to use the system test is to PROVE out your theories... You like StochRSI(14) and you like Dahl. Logic says that if these two are good alone they will be GREAT together right???? Well, put a system test together and see what it says. I bet you will be surprised at the results..... Dave Evans