Have you tested your strategy lately?

Discussion in 'Strategy Development' started by abattia, Jan 5, 2011.

  1. Every day.
  2. I don't believe a strategy can be tested in the time scale of a day. A strategy has a longer time frame and needs to be tested with that perspective.

    What could cause a strategy to fail? Likely it is systemic changes in the market. For that to be detected one must look over a sequence of trades to see if the performance is deteriorating. Have the returns from each trade begun to change, for better or for worse? Have the number of sequential losses or sequential wins changed? There are other metrics, but I'm sure I've conveyed the idea.

    On a shorter time frame, the other key component of a trading system, i.e. the trader must be tested. A successful strategy traded by an undisciplined trader will still lose money. A structured and disciplined and unbiased approach should be utilized by every trader to see if developing problems are a consequence of the trader or the strategy.

    Constant attention to the performance of the trader and the strategy greatly improves the likelihood that a failure of either brings minimum loss to the trader's account.
  3. BwPirt


    Couldn't have put it better.
  4. Hey, guys a nooB in FX, I know how currency war works but I don't know how to make a trading plan... :p any help would do...