basic question

Discussion in 'Automated Trading' started by tentenequals20, Jan 5, 2007.

  1. I like a very simple strategy, say MA or bollinger band approach. I tried this in Nasdaq 100 stocks for last year.

    it produces resonable results. at this point shd I try trading it?

    what do you guys do when you're happy with the backtesting results

  2. Depends.... #1 can you trust your backtesting? Its very easy to make mistakes in backtesting where the system may have knowledge that is not known at the time of entering the trade.....

    #2 Does your backtest account for commision and reasonable slippage?

    #3 Is the expectancy per trade at least greater than several ticks in the product your trading?

    #4 How many trades did it make in the backtest?

    #5 How does the strategy perform when the parameters such as lenght of MA adjusted up and down? Does the results remain positive or does it sharply drop off after small changes in the parameters?

    All of these questions are very important before going live. Even then you have no gurantee it will perform... The next logical step is to NOT go live but spend some time trading it in a simulation mode forward testing for a few months to see if things hold up.