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Optimization Of Trading Systems Part 1

In one of the previous articles I noticed that the average person has the best chances to become the successful trader in the event that he applies 100 % mechanic approach. It is unique reliable method to reduce emotional influences which destroy sooner or later all traders. It also the unique way, allowing to estimate your method of trade on profitableness on the basis of already existing historical data. Reject hope to find ever “perfect system”. The perfect system of this month can bring losses too. Abundantly clear that it will have many difficult periods in the future. Just as each trader and each methodology has the period of losses, and each trading system, extradependences on that how much successful it is created and will have the periods when he can’t successfully trade.

Let’s talk about good system. I determine a good system which at hypothetical testing for the historical data brings rather low losses and sufficient profit in sizes, good for me, being simultaneously enough steady to trade with profit on the different markets with use of the same parameters.

At system creation it is necessary to be careful of a trap over-curve-fitting to back data (adjustment under the historical data). The more you adjust the system to the historical data for improvement of its productivity; the less probability of that it will trade with profit in the future. This moment is very heavy for perception of beginning traders. They expect that the method well working in the past; will be working well in the future. Profitableness in the past is not adjusted under historical data by given trading systems and only approximately corresponds to it and gives profitableness in the future.

The best method effectively to resist to system adjustment under the historical data it is to be convinced that your system works in different markets the same. Successful traders use the same parameters of systems in the different markets without looking that it seems unnatural. If you don’t trust me, read two books of Jack Schwager. Jack himself managed money using system which had the same parameters in all markets.

The bigger quantity markets can trade your system and the on longer historical pieces then the steadier it is. I trade one of my systems in 15 markets with the same parameters. At testing it was profitable even on the greater quantities of markets within more than 10 years.

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