Archives: forward-testing

Telechart for Forward-Testing Trading Strategies

July 9, 2010 | By jackieannpatterson | 1 Comment | Filed in: Backtesting Set Up, Outside Products Reviewed.

Last week I wrote an article about a situation that often stymies traders who are serious about learning a discretionary strategy.   During forward-testing, many tools inadvertantly give clues as to what the next bar will do, rendering the effort useless. One tool, however, presents a clean view of the chart at all times.   That tool • Read More »

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Forward-Testing Spoilers

July 1, 2010 | By jackieannpatterson | No Comments | Filed in: Backtesting Set Up, Outside Products Reviewed.

Many of the tools I’ve tried subtly spoil the surprise when used for forward-testing. What I mean by forward-testing is taking a chart, scrolling back in time – without peeking! – and then stepping forward one bar at a time.  The purpose of the exercise is to try out a discretionary trading strategy in a safe environment.   • Read More »

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Curve-Fitting Definition

November 4, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

 Curve-fitting in general is the process of finding the (mathematical) description which best matches a given set of data.    When its not applied to trading strategies, it can be a very useful way of drawing conclusions from experimental data.  When applied to trading strategies, curve-fitting can produce over-optimized, over-optimistic results.   In any set of price data, • Read More »

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Data Mining Definition

November 4, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

Data-mining is the process of selecting the best of many strategies via backtesting.   Each strategy is tested across the same stocks and time periods.  Results are compared, and the best strategy from (proper) backtesting is likely to be the best strategy to trade live.    Live trading performance numbers will vary as the market will not behave exactly like the historical price data used in • Read More »

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Forward-Testing Definition

October 27, 2008 | By jackieannpatterson | No Comments | Filed in: Glossary.

Forward-testing, means trading a strategy live with very small size to see how well the strategy (and the trader!) perform in real life.    Forward-testing is typically done after backtesting to make sure the trading strategy is not the over-optimized result of curve-fitting or data mining.  It also gives a chance to try out the mechanics of entering, tracking and • Read More »

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