Foundations of Trading: Developing Profitable Trading Systems using Scientific Techniques

Foundations of Trading: Developing Profitable Trading Systems using Scientific Techniques

<div>The trader's universal goal:</div><div></div><div>To have confidence that the signals generated by the trading system precede trades that provide rewards adequate to compensate for the risk.</div><div></div><div>... The key word is confidence.</div><div>... The primary limitation is risk.</div><div></div><div>This book presents an approach to developing profitable trading systems using scientific techniques, melding together several key aspects:</div><div>... Personal risk tolerance.</div><div>... Profit potential of the financial issue being traded.</div><div>... Data analysis.</div><div>... Adjusting the model to fit the data.</div><div>... Validation to estimate future performance.</div><div>... Comparing alternative use of funds.</div><div>... Determining whether the system is working or broken.</div><div>... Computing a proper position size to maximize account growth while holding drawdown within the trader's tolerance.</div>