Build Better Strategies! Part 3: The Development Process

This is the third part of the Build Better Strategies series. In the previous part we’ve discussed the 10 most-exploited market inefficiencies and gave some examples of their trading strategies. In this part we’ll analyze the general process of developing a model-based trading system. As almost anything, you can do trading strategies in (at least) two different ways: There’s the ideal way, and there’s the real way. We begin with the ideal development process, broken down to 10 steps. Continue reading “Build Better Strategies! Part 3: The Development Process”

Build Better Strategies! Part 2: Model-Based Systems

Trading systems come in two flavors: model-based and data-mining. This article deals with model based strategies. The algorithms are often astoundingly simple, but properly developing them has its difficulties and pitfalls (otherwise anyone would be doing it). Even a significant market inefficiency gives a system only a relatively small edge. A little mistake can turn a winning strategy into a losing one.  And you will not necessarily see this in the backtest.  Continue reading “Build Better Strategies! Part 2: Model-Based Systems”