| JAN 2004
Boosting Rates Of Return With Noncorrelated Systems by Richard L. Weissman
Boosting Rates Of Return With Noncorrelated Systems by Richard L. Weissman Here’s how adding noncorrelated assets within a trading system and combining noncorrelated systems can help your trading. Mechanical trading systems offer traders and risk managers a distinct alternative to more commonly used discretionary methods. Many mechanical trading systems use mathematical technical analysis, also defined as the mathematical study of past price history. I will explore methods of improving rates of return using mechanical trading systems without significantly increasing drawdowns. I will demonstrate how to use noncorrelated assets within a single trading system as well as the combination of noncorrelated trading systems. One of the simplest examples of a mechanical trading system is the two–moving average crossover system. My intention in this article is purely to show how traders can improve their rate of return via diversification; as a result, I have purposely chosen two systems whose performance is only marginally profitable.
by Richard L. Weissman
Technical Analysis of STOCKS & COMMODITIES
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