| MAY 1990
Finding reliable trading strategies (revisited) by Thomas P. Drinka
Finding reliable trading strategies (revisited) by Thomas P. Drinka With the proliferation of microcomputers and analytical software, speculators and commercial traders routinely conduct research to evaluate the potential performance of trading strategies. These investors optimize their technical indicators by evaluating the trading performance of different parameter sets for each indicator. ""Unfortunately,"" according to system programmer Steve Kille, ""most technicians are simply searching for a set of rules which produce the highest level of profits over historical data and then using these same rules to make trading decisions. The real focus of any research should not be the level of profits,'' Kille adds, ""but the degree of reliability the system is likely to maintain during actual trading."" Thus, analysts should not only identify the ""best"" trading strategy for a historical time period but also test that optimal strategy in a subsequent period.
by Thomas P. Drinka
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