[smwinc]

Originally Posted by Joseph »

You mean to sell it to a firm?

No. . . to be honest my point was almost sarcastic.

With respect Jo, it sounds like your still reasonably new to trading. Many of your questions are very simple things, that you REALLY need to know before you start churning out an automated trading system.

Originally Posted by Joseph »

Slippage? How does this manifest? Does it mean: I have a stop placed at a trade and then I loose more then I calculated by placing the stop ... because the stop goes by an unknown fact in the not desired direction?

Slippage can refer to two things:

1) As you said, you have a stop (let's say a buy stop market order) placed at a price, and the market sweeps down, and you get out 4 ticks lower. That is slippage.

Or, sometimes people refer to slippage in the same context as realistic fills.

2) Say you have a system which was taking 1 tick profit 1000's of times a day in the S&P. Often people backtesting forget that price needs to trade through a price for you to get filled, as often you're near last in que. Hence, to take a 1 tick profit, you require a 2 tick move

Originally Posted by Joseph »

Draw down? Does this mean loss from balance?

Let's say you have you a system which is 70% profitable, av. win 1,000, av loss 1,500.

Your system's expectancy is positive, so in the long run you make money with these stats and live happily ever after.

So you open a $4,000 account, and get hit with 3 losses in a row, as you would expect with this system, and you go broke. Happens more often than you would think.

[BlowFish]

If it where me I would look at brokerages that can run your strategy on there servers. Strategy runner is good for this I hear.

[Joseph]

Originally Posted by smwinc »

With respect Jo, it sounds like your still reasonably new to trading.

True, I trade only for 1 year ... around first half of it on demo account the rest on live mini account, but spent lots of time learning to think as a trader from a good source, by means mostly through technical analises of course also some basics regarding fundamnetal part to.

Originally Posted by smwinc »

Many of your questions are very simple things, that you REALLY need to know before you start churning out an automated trading system.

That is the reason why I ask it, but can assure you that these are mostly terminological, do not wish to use them wrong in TL ... thanks for your time for explaining the means.

Originally Posted by smwinc »

Slippage can refer to two things:
1) As you said, you have a stop (let's say a buy stop market order) placed at a price, and the market sweeps down, and you get out 4 ticks lower. That is slippage.

... suppose this tipe is mostly at equities (shares) for instance where you have to count also on gaps between candles = slippage.
At currencies (forex) more or less slippage involves then the modification of spread, am I right?

Originally Posted by smwinc »

2) Say you have a system which was taking 1 tick profit 1000's of times a day in the S&P. Often people backtesting forget that price needs to trade through a price for you to get filled, as often you're near last in que. Hence, to take a 1 tick profit, you require a 2 tick move

Here you also refer to broker fees to:
- at forex slippage is included in spread
- a shares there is beside broker fee also gaps that can make stop orders to be jumped over ... so in a forst case you lose more than the risk you were counting on

Originally Posted by smwinc »

Let's say you have you a system which is 70% profitable, av. win 1,000, av loss 1,500.

Your system's expectancy is positive, so in the long run you make money with these stats and live happily ever after.

So you open a $4,000 account, and get hit with 3 losses in a row, as you would expect with this system, and you go broke. Happens more often than you would think.

True, but I suppose you do not make things like that, having a money management, for example is we consider equities(shares):
- 1% risk of your balance / each trade you make
- risk/reward ration to be no less than 1/2 (win two times more than you expect to loose) ... of course positioning the stop in right place is a must

By doing this you won't loose only 3% of your balance if you catch first three to be losses ... and if I mention losses ... that is why I think on doing automated trade in time ... to reduse the probability of losses ... test and optimise strategy for specific share of currency pair ... but want to find a broker that also gives data I can use for backtest and also for trading ... I heared that there are traders that are using data from one surce and trade through other source ... these need lots of care ... and with all this care I do question if they are right ...

[Joseph]

Originally Posted by BlowFish »

If it where me I would look at brokerages that can run your strategy on there servers. Strategy runner is good for this I hear.

Thanks will check it out. Did not know about it.