Trading system optimization reveals
the parameters or their
combination that improve the work of a particular trading system. The
rule of thumb is rather defining broad settings for parameters for a
given market than setting up some specific rules. This process can
significantly improve results, but it involves a certain risk because
the core principle of testing lies in using past performance to
determine future movements of prices.
Which useful
tips
should keep in mind the person who has decided to provide trading
system optimization (it is often done with the help of
trading system software)?
First of all, it is a thorough study of the parameter values that one
is going to optimize. There is no sense to be in hurry, be glad of the
first successfully done operation, and finish the work. There would be
many attempts and failures experienced before the favorable and wishful
combination is found. One should remember that the other
parameters remain constant for determining the effects of any changes.
When one is sure that he/she has found the value that shows the best
results in the back testing, it is high time to set it into the trading
system that is being optimized.
There is also a check box that is added to the optimization window with
a title "Optimize Symbols". After checking, the symbols
themselves become optimization parameters. The feature is used
only when the
trading systems
that are subjected to the optimization process are setup to back test
on a quote page.
Some system developers omit such step of
designing
as trading system optimization because of several reasons. The first
one is that optimization often exaggerates the final results. It can be
explained very simply as the parameters are very specific and
not
multi-purpose, any change on the market may plainly cause instability
in different spheres of activity. The second reason is that trading
system optimization isn't likely to improve performance
greatly.
They agree that some improvements may take place, but it will be done
at the expense of losing universality.
