Adding a new dimension to measuring FX autotrading performance

Greg Hay outlines how clients can now be provided with verified trading results taken from live accounts, to reduce the confusion facing Retail FX Traders when selecting trading systems to add to their portfolio.

First Published: e-Forex Magazine 27 / Retail Forex Client / April, 2007

Backtesting – the original techniqueIn the past and present, algorithmic trading systems use back-testing methods to determine the profitability and robustness of a particular trading system. The benefits of mechanical trading systems is clearly explicable, it allows the trader to maintain a level of discipline, control their emotion, remove doubt and manage money effectively.Many mechanical trading systems are reactive by design, they are formulated with historical data and optimised based on the prior behaviour of a trading market. However, the advantages of back-testing are obvious when performed sufficiently. Back-testing a system is as close we can get to determine the sustainability of a mechanical trading system without actually risking capital. Back-testing provides a gateway to gain confidence regarding the profitability of the system, before you make the decision to commit your hard earned money to trading it.The back-tested data report is not a complete system upon which you should base...continued

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