Historical Verification

Question: What is historical verification of trading system based on fixed mathematical logic?

Answer:

It is the process where raw open/high/low/close historical data of market is examined by advanced mathematical probability techniques to understand the nature of financial market. There are many stages from A to Z, each has its unique importance and interlinked with one another to sum up many useful solutions at the end

Question: Why it is important to evaluate the trading system over history?

Answer:

  1. To check either strategy is successful or failed and process of its modification if it is failed.
  2. To check profits, risks and timings of strategy to better understand.
  3. To gain super confidence after realizing the basic and advanced statistics of strategy.
  4. To prepare for all situations like what we are going to do, what can happen and how to manage it.
  5. It provides solid basis for long term profitable trading
  6. It is the source to check hundreds and thousands of trading mythologies and selecting those who are truly real and practical

Question: Is there any difference between real live account performance and historically tested performance?

Answer:

No difference, not at all!!!! BECAUSE it is based on fixed logic and market moves according to three conditions,  1. It will go up 2. It will go down or 3. It will consolidate and there is no any other form and never would it be. Fixed logic covers all these three types in past as well as in future, so results are very identical if spread, slippage and commissions are also added while testing the system in history

Question: What should be source of historical data? How good & bad data effects negatively in testing?

Answer:

It is very important question. Source of the data should be very reliable and normally paid data is more accurate over free data. We strongly recommend and apply 1minute or tick data to avoid any possible errors because sometimes in 30 minutes or 1 hour market can speculate in a strange way and there could be many fast cycles of movement which cannot be measured in 30 minutes or 1 hours based on open high/low/close price in that particular time. Further you can set average movement in any time frame and if there is any unusual move within 1minute or tick data, it can be easily traced and corrected to make it sure that system is based on accurate historical data. If data is corrupt then strategy performance will become automatically corrupt even it seems very successful. You should be cautious about this matter.

Question: What kind of technology is preferred to examine historical data and setting up a successful trading system?

Answer:

Mathematicians who have expertise in advanced online techniques like excel or in any programming have an edge to maintain accuracy as well as to avoid many unnecessary additional laborious work. The highest technique is the ability to implement many mathematical & statistical formulas over historical data through excel platform or any computation programming. We use both  

Question: What are major challenges or obstacles in historical verification of trading strategy?

Answer:

  1. Determining & setting up a criteria of fixed mathematical logics to address the profitability & and its associated hurdles to achieve the desired object
  2. Attaining accurate historical data more than 5-10 years
  3. Selecting most best formulas among thousands of approaches
  4. Lack of mathematical knowledge and most importantly its implication in advanced online computing programs

Question: Do you provide your own historical data of different markets like currencies, commodities, indices etc?

Answer:

Yes, but it costs and can be discussed by contacting us