Tips and tricks on
AFL
Trading systems in
AFL
Introduction
Trading successfully
without a system is extremely difficult. Most traders lose money because
they base investment decisions on emotions. Fear, greed, hope and
panic cause people to make poor decisions. It is also nearly impossible
for most traders to analyze hundreds of thousands of data entries
to determine patterns and probability. This is the place where AmiBroker
can help you a lot. It can scan the whole database for buy and sell
signals defined by you. Is is also able to back-test and optimize
large amounts of historical data, to give you the very best possible
parameters of your trading system.
Testing your system
Always divide
your data into at least two sections, one section to optimize, and
the other section to test. After finding the optimum parameters for
the optimized data, study the performance of the same parameters on
the test data. The results should be similar. A trading system’s performance
will fluctuate from year to year on a single security. So, to get
a reliable result, the optimization needs to be carried out over a
good number of stocks within an exchange or your portfolio. If the
portfolio profit shows about the same profit during the optimized
period as compared to the complete data range, then you have reliable
results. If not, you have simply over-optimized your system.
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