In God I Trust, All Others Must Show Me Data!

Carrying out engineering evaluations were part & parcel of my job when I was working as an Engineer not too long ago. Whatever new things, system, materials, process.......anything new that I want to implement, I had to present hard data to my management as proof of project viability, before I can implement any of them.

Well, it's the same with trading. Whenever I'm looking at a new trading system, I will need to test it out first, before I start putting real money trading it.

I have just completed a forward-test on the new strategy on demo that I am looking at. The summary of result is as follows:

# of Win	28
# of Loss	15
Accuracy	65%
$ Win	$18,065
$ Loss	-$7,266
Avg Win	$645.18
Avg Loss	-$484.40
Avg W:L	1.33
% Exp	52%
# of units	40
W prob	0.65
L prob	0.35
Sub r-o-r	0.54
% r-o-r	0%

Over the test period, this system yielded 52% Expectancy with 0% risk-of-ruin. No real money involved, as the test was done on a demo platform. I am comfortable with these statistical figures, so I will trade live with this system starting this week onwards.

For those who are curious on these calculations, they're all based on Dr Van Tharp's work. Google 'em for more info.

This system is basically daytrading off daily timeframe, so it's a pretty active trading. Since I'll be trading practically everyday, I will not put live charts on each of the new trades that I'm taking.......just feels like a lot of work to me.