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Dear Comrades:
At our next Omega Users Group meeting Mr. T. Henning Murrey is going to
present his trading software.
My question is how one evaluate any trading software? (I am not suggesting
to buy it on the first place).
Being comprehensively challenged (so I can not use the modern terminology)
I would ask the software developer the following simple questions:
1. There is about 114 years of daily data available for the DJIA. Did you
test your software over that period of time (for the EOD) software?
2. What was the results? How many trades were generated? How many
profitable? How many losers? What was the average profitable (losing)
trade? What was the total result?
3. What was the maximum draw down?
4. What was the assumptions for the slippage and commissions?
If the answers looks interesting and realistic I would continue:
5. How trading signals are generated? (What is the algorithm for the signal
generation)?
7. Are the parameters for the system "fixed" or they are adjusted by the
market input?
If I am satisfied with the answers I would test the system over the 114
years of historical data to see if I could duplicate the result claimed by
the author and then test the system over the next four year cycle before
committing the money to trade (or real money to trade).
What I am missing?
Confused comrade Alex.
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