|06-20-2012, 09:05 PM||#1|
Join Date: Jun 2011
Thanked 3 times in 3 posts
A Philosophical Question: What is the Life-Cycle of a Strategy
here is a question for discussion for those of you who have, over time, created strategies that make money:
What is the Life-Cycle of a Strategy? Meaning, how steps does a strategy go through as it grows from being something that is simply a good idea, to something that makes money? Here is my stab at it:
1) A Strategy is coded.
2) Perhaps a strategy is backtested.
3) A strategy is paper traded in real time. it makes a few big trades, and a lot of bad trades. It is probably not profitable at this stage.
4) An exit strategy that fits the entrance strategy is developed
5) Controls begin to be created to eliminate the bad trades. Rules for not trading against the trend, oscillators are added, etc
6) The strategy begins to become profitable in real time paper trading
7) We try the strategy in real time with real money.
8) More quality control -- eliminate the bugs that got us into bad trades.
9) Ongoing tweaking.
Does anyone else have thoughts on this process?
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