Successful Trading Process
After you’ve found a profitable trading system that you already back-tested, just how can you make sure that this system may make exactly the same gains in future?
No body can predict the future, the body can easily make losses in next decades or can be no tradable.
There are some tests you must do before taking a trading system, these tests swill show the robustness of the system and it’ll become more likely to show gain in future, when passing these tests.
Test 1 : Make sure that you set liquidity concept, that your entry and exit rates are realizable.
Test 2: Examine again your trading systems and your principles (This is extremely important). Browsing To official site probably provides aids you could tell your girlfriend.
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When there is one stock that made very large gain check, the device will probably become no worthwhile without this stock.
Test 3: Change twice or 3 times the date of start for the simulation, if it still show good results then it’s passed the test 3.
Test 4: Change values of some parameters or variables you have in your trading system rules, you must change one price and then back-test, change another and then back-test…
It passed the test 4 If the results are not affected quite badly then.
Test 5: Try to reduce the process from buying 20% or even more of shares you previously ordered when doing the back-test. Then re-run the back-test. To compare additional information, people are asked to check-out: tumbshots. To pass this test, system should show pretty the same results as before.
Test 6: Equity chart must have a good look, always check some fact prices like sharpe ratio, sortino ratio, typical deviation, maximum drawdown, average time for gains recovery…
This will depend o-n the chance you’re prepared to just take but choose only systems which have : higher sharpe ratio, higher sortino ratio, lower standard deviation, lower maximum drawdown…
Exclude systems that have very large max drawdown, standard deviation and average time for increases restoration. For one more interpretation, you should have a glance at: the scrambler bobby rio.
The must important aspect i think is common day for gains recovery.
Their the average number of day-that you need to wait until your equity value will goes back to the same level before the drawdown happen.
Large beliefs will let you wait for long times before recovering gains and for sure many investors will abandon their trading system, and that is the worse thing that sometimes happens to your dealer since soon after that, the system will show very good results. (That’s always happen)
Theses tests are very restricted and you’ll deny perhaps all your trading systems, but when trading you will place your money, real money, therefore I think you have to be very particular to make all chance in your side..