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Entry Only Strategy Potential Analysis

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  • Entry Only Strategy Potential Analysis

    Any trading strategy starts with the assumption/idea that entering at its specific entry points will (on average) indicate an expected move of the market.
    With BTWFMgr you can now VERIFY if this assumption is correct - here are some examples how different strategies can perform:
    Permanent Strategy Potential - best scenario
    Here is an example on the best type of strategy potential:
    The market moves in the predicted direction and stays there.
    Temporary Strategy Potential
    Here is an example on the second best type of strategy potential:
    The market moves initially in the predicted direction, but then moves against you.
    So you have to adjust the “Strategy Exit Logic” accordingly:
    tighten the trailing stop after around 60 bars and set the target in the $60 area.
    No Strategy Potential
    Here is an example of a strategy which has NO strategy potential:
    The market moves from the very beginning against you.
    You can save yourself a lot of time (and money), because even the best “Strategy Exit Logic”
    cannot give you consistent profits, when the entries have – on average – no potential!
    Try a different market and/or timeframe – or improve/invert the strategy logic.


    More Info at: http://www.profsoftware.com/bt/home.htm#PotAna and http://www.profsoftware.com/bt/

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