Foundations of Trading: Developing Profitable Trading Systems using Scientific Techniques

Foundations of Trading: Developing Profitable Trading Systems using Scientific Techniques

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