Understanding About Trading Systems For Metastock
Trading systems for Metastock usually use indicators and oscillators known from the technical analysis. Apart form simple systems which are based on one or two indicators, there are also many complex platforms that are able to adapt themselves to the current market conditions. They recognize whether there is a trend or consolidation and choose the most suitable strategy.
Metastock trading systems enable testing your individual trading ideas based on historical data which makes it easier to take decisions on their future use. Although creating and testing the Metastock trading systems is usually time-consuming and requires considerable expertise, it brings profits in the long term. To earn high profits you should combine particular tools of technical analysis into one coherent and logic integrity. While building a Metastock trading system you need to make sure it is logic and coherent, not only thinking of the possible profits it could bring you based on historic data.
First off you must outline the operating conditions of the system, when it should be unbeaten and when it would fail. This can let you check if the ensuing losses result from the mistake in the method itself or it is due to particular market conditions. When the system is built at random with random indicators and oscillators selection, it often generates profits only in the case of the historic information but in the genuine market conditions it brings losses. The parameters of trading systems are typically being matched to the historic info by optimisation. It is composed of selecting such signals that would bring the highest profit in the testing time. Different values of parameters are checked for each indicator or oscillator and then the likely profit that would’ve been reported is being worked out. The very next step includes combining the outcomes and selecting the most successful parameters. There’s a chance of over-optimizing the system. That implies the values of tested signals didn’t match the historic info without logic and cohesion of the technique.
After understanding the general idea of the trading system and defining the rules of entering and exiting the market there comes a testing process. Thanks to the programs such as Metastock or TradeStation it is possible to make thousands of tests in order to choose the best parameters of the indicators. It is possible if you follow several rules. In both of them setting the value of indicators lies at the end. They are usually connected with generally accepted value or with the ones selected in the optimization process. Both ways have their own advantages and disadvantages but none of them should be rejected beforehand. The selection of the parameters for indicators should be considered according to the philosophy of the entire system and its tools. At the same time however, taking into account the accepted assumptions, the decision about their precise value shall proceed to a larger extent by optimization.
The second most crucial issue, aside from optimizing parameters of the metastock trading program is assessing its potency. To do it you may use assorted statistical data like the proportion of the lucrative transactions to the lost ones, comparison of the average exchange profit to the highest loss or average profit of moneymaking exchange to the exchange at a complete loss. Safety of the system is also defined by a proportion of total profit from all transactions to total loses from all transactions. The research into the capital curve is also a helpful tool. It brings lots of precious guidance. Thanks to the capital curve you can find out whether the profit, that the system brings you, has risen uniformly or it was actually the result of the one extraordinarily lucrative exchange. You’ll also know how often and how robust the changes of the capital are for example. By comparing the capital curve with the quotation, you can simply notice the moments when the system fails or outline whether the system is better during robust trends or during horizontal movements.
Analysis of the Metastock trading method potency isn’t a straightforward task. At the start you can get a bad impression the best system is the one which brings the highest profit. But the reality is much more complex. Though in a last reckoning the rate of return from invested capital is always crucial, you need to remember that system is tested based totally on historic information which sometimes are matched to the value of parameters. It implies a good result which was achieved in the year does not need to be repeated in the subsequent period. That’s why firstly we should take under consideration the safeness of the system and as the second thing its profits.
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