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Introduction to BacktestingWhat is Backtesting in TradingBacktesting is an essential technique in the trading world and is useful no matter which financial markets you trade. It involves applying your trading rules, or your trading strategy, to past data using...
Trading Mean Reversion is a popular strategy that has been extensively studied in several stock markets globally (especially the US stock market and the Australian Stock Exchange). However, despite its popularity, there is still a lack of research on its effectiveness...
Trend trading or trend following In stocks is a strategy that has been around for a very long time. This trading strategy has been studied Extensively in several of the major stock markets around the world, however. There has not been. A good study. Into the...
If you apply one system with an index filter to all markets with a big watchlist, you will be turning that system on or off for all markets simultaneously. So, do you want to build country diversification into your portfolio intentionally? If you're going to build...
There are a couple of reasons why stock trading is hard. First, most people zoom in way too much. They're looking at five-minute or at one-day charts; and watch social media when Bitcoin jumps six or 7% in a day up. It's like, “oh, it's over, quick, buy before you...
There's a slight distinction between switching off and going to cash. All of the systems should eventually go to cash if the market conditions are not suitable, just part of they don't have any more buy signals, and all of the open trades close out. So, you're in...
As you grow, there are always holes in your portfolio you can plug. There is market behaviors and scenarios that you could dream up that your portfolio may not do brilliantly well in. Thus, you could create a system to address that. There's always the benefit of...
The purpose is to make sure that the system is yours, that you understand the rules, and you know why the parameter values are chosen where they are. You've satisfied yourself that that's okay. You like the performance, all of these things. It's sort of the handoff...
Adding a system becomes too much depends on you, your routine, capacity, and various other things. For adding a new system, you must execute your current system smoothly, mistake-free, with confidence, and without stress. If you're feeling stressed and anxious about...
To pull the trigger and take your new system, certain things have to be in place. First is understanding the rules of my system completely, to be consistent with the paper trading process to know I'm doing the right thing every day, not fumbling, and not making...
How do you know if your trading system rules still work? Should I continue to use my trading system? Or should I change, refine, re-optimize or just throw it away altogether? The answer is through understanding the performance statistics that the system is generating....
It absolutely doesn't matter. In fact, it's one of the less important statistics to make trading profitable. This is contrary to what you think because you need to be accurate and right to make money. That's what school teaches us to do. For example, my trades are 50%...