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We have heard of the dangers of optimizing an indicator to perform well over a past period. |
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Yes often, and I did subscribe to that piece of advice myself for a long time. But I am now convinced it simply isn't useful.
Even if you just allow for being in a Bull or Bear phase for whatever instrument you're trading and adjust your upper and lower levels for indicating overbought/oversold this will find this yields a higher number of successful trade entries. And fewer trade entries too.
You can then take this one step further and
positively optimise for the recent history of the instrument under analysis. All instruments go through cycles of expansion and contraction and the periodicity of those cycles WILL change over time. You need (IMHO) to let the instrument
tell you what beat it's marching too rather than take a position that all instruments will bend to the might of your
POWER setups!
Having said that, I use few indicators and the work involved in tailoring even those few to my traded instruments requires significantly more time and more effort. And it makes it doubly intensive when you have a scanner running on indicator-based formula and parameters too. But, in my view, the payoff is well worth the additional energy and time.