Hey guys,
I was wondering if you could help me out with something. I've created a very good trading system that's finally finished being programmed. It uses a couple of technical indicators with strict rules and then correlates that trade with three other currencies.
I did all the right work, meaning I hand tested it to make sure the hand trades equals the programmed trades; took spreads into consideration; forward tested it for a couple months to see it the proper trades were met, etc. etc.
My questions are:
1) How long does it really take for a trading system to be considered reliable? I did the longest available data for metatrader, which is just before July 2004 minute data. So, from July 2004 until now, Sept 2008, my system was pretty profitable. It goes by quarters. WIthin that timeframe, only 17 quarters are available. The lowest quarter available yielded about 15% increase on trades, while the largest quarter yielded close to a 100% increase. However, generally each quarter would provide around a 40% increase.
So, is a little more than 4 years (or 17 quarters) considered a good length of time for a trading system to be reliable?
2) I keep on hearing two arguments about trading systems and I was wodering if there is a clear answer. Which one do you think is more correct?
a---If more people use a trading system, the less reliable it becomes (because brokers and firms can start anticipating trades and manipulate it to cancel out and hit stops)
b---If more people use a trading system, the more reliable it becomes (because it's a self fulfilling prophecy; if more and more people go LONG on a particular trade at the same time, it will drive the exchange rate up and make that pair raise in price as expected)
Any help will be greatly appreciated
I was wondering if you could help me out with something. I've created a very good trading system that's finally finished being programmed. It uses a couple of technical indicators with strict rules and then correlates that trade with three other currencies.
I did all the right work, meaning I hand tested it to make sure the hand trades equals the programmed trades; took spreads into consideration; forward tested it for a couple months to see it the proper trades were met, etc. etc.
My questions are:
1) How long does it really take for a trading system to be considered reliable? I did the longest available data for metatrader, which is just before July 2004 minute data. So, from July 2004 until now, Sept 2008, my system was pretty profitable. It goes by quarters. WIthin that timeframe, only 17 quarters are available. The lowest quarter available yielded about 15% increase on trades, while the largest quarter yielded close to a 100% increase. However, generally each quarter would provide around a 40% increase.
So, is a little more than 4 years (or 17 quarters) considered a good length of time for a trading system to be reliable?
2) I keep on hearing two arguments about trading systems and I was wodering if there is a clear answer. Which one do you think is more correct?
a---If more people use a trading system, the less reliable it becomes (because brokers and firms can start anticipating trades and manipulate it to cancel out and hit stops)
b---If more people use a trading system, the more reliable it becomes (because it's a self fulfilling prophecy; if more and more people go LONG on a particular trade at the same time, it will drive the exchange rate up and make that pair raise in price as expected)
Any help will be greatly appreciated
