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Old 01-01-2007, 05:23 PM
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Re: strategies, indicators and so forth

Once you're done you need to walk-forward it (watching it in real time) for a few months and compare to see if the results is similar to what it's been tested to historical data. Most of the time, strats fail in the real time due to not considering adding other factors in such as slippage and commissions, etc. If it does well in real time after a few month, let it go with real money with small lots and see how it goes. Need to keep an eye on the Max drawdown. This is the biggest problem for many traders. The guide is to have max DD x 2 the money to cover these dips. You also have to decide where the cutoff point is (pulling the plug when it reaches a loss). Many use the trendline of the equity curve or 2x max DD for example.

Adding slippage and commission into the strategy testing makes the difference between heavy losses and extreme gains.

Without commissions and slippages



With commissions and slippages


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