Optimisation Pro's Con's

Optimisation Pro's Con's
I would like to know everyones views on optimisation!?I have been sent emails from updata recently saying how amazing there ta2 programme is as it can optimize allsorts of technical indicators from new highs to macd!Now i have to say i have heard many things over the years like the market breaths and moves in waves cycles and you need to get in touch with the market to understand what is likely to happen next. I say likely as we all know you cant be right everytime!
However optimisation by its very nature designs a set of rules around a share/index and creates the most profitable set of figures it can!
So we then move into backtesting !How can we learn to trade without the past being relevant to future moves!Traders who have made a fortune have strategies that have worked and many still do.Is optimisation the solution?Well my feeling is im not sure but what it does do is give you alot to ponder!There will be many who will immediately dismiss it and say no way!! But would i would say is have they really honestly looked at it?Im still learning and want to learn more.If i believe the idea that every market share index is different and moves on its own cycle wave!Then if theres a way to measure that maybe optimisation is it!

Few Points :--

The updata team are junk of amateurs.. .. I have known them since 1999..

When they talk about optimisation what are they talking about ? Optimisation of what ? TA indicators settings, over all strategy, exit, overall return , there are many many parameters which are bad to optimise such as Return on account based on exit ..

Send them an email and ask them what they mean and we shall discuss the theoretical as well as practical pro's and cons..

Neilm16

optimisation of ma isn't bad but often it's just a way of
rationalising the past movement of the particular instrument.
when backtesting split the data in two - optimise the first half
and see if it works on the second.

If you ever intend to use optimisation of a strategy to determine future trades it should be the last thing that is done. In other words your strategy should be profitable without any optimisation first and then only optimised as a final step.

Too many of these "too good to be true" methods and systems are just curve fitted optimisations to make past trading appear profitable and then fail when tested in real time.

I know this because I have conducted numerous backtests on many different strategies and found that even hopeless systems could be made to appear profitable using optimisation techniques.



Paul

Hi Trader 333
Thanks for your comments!What you have said u see interests me lets take an example lets say for arguments sake you like a ma crossover system and you choose to trade the FTSE using a 25 and 12 crossover system but it makes a loss.Do u now give up on any ma crossover system or do u optimise?Lets say u do and u find the most profitable combination is say 18 and 9 do u trade that? Or do u say well the past doesnt mean that it will happen in the future and therefore not bother?