A technical analysis classic, newly updated to help traders develop and forward-test a high-performance trading system for today's markets
In trading, a winning system is everything. While it is theoretically possible to buy a "canned" trading system, most experts agree that the best system is proprietary to each trader--developed, implemented, and tested by the individual to suit his or her exact requirements. A stimulating mix of cutting-edge techniques, timeless principles, and practical guidelines, this updated edition of a technical analysis classic offers traders a comprehensive methodology to develop and implement your own trading system, bridging the gap between analysis and execution.
Tushar Chande (Pittsburgh, PA) holds nine U.S. patents for creative solutions to flexible manufacturing problems using high-power lasers and optical fibers. A contributing editor to Technical Analysis of Stocks & Commodities magazine, he has been a registered Commodity Trading Advisor and is the principal author of The New Technical Trader (0-471-59780-5) (Wiley).
Table of contents
- Cover Page
- Title Page
Chapter 1: Developing and Implementing Trading Systems
- What’s New in This Edition
- The Usual Disclaimer
- What Is a Trading System?
- What Is a Trading Program?
- Classification of Return Generation Processes
- Comparison: Discretionary versus Mechanical System Trader
- Why Should You Use a Trading System?
- Robust Trading Systems: TOPS COLA
- What Is a “Good” Trading Program?
- How Do You Implement a Trading System?
- Is Systematic Trading Easy?
- Who Wins? Who Loses?
- Appendix to Chapter 1 : A Brief Technical Analysis Primer
- Chapter 2: Principles of Trading System Design
Chapter 3: Foundations of System Design
- Diagnosing Market Trends
- To Follow the Trend or Not?
- To Optimize or Not To Optimize?
- Initial Stop: Solution or Problem?
- Does Your Design Control Risks?
- Data! Handle with Care!
- Choosing Orders for Entries and Exits
- Understanding Summary of Test Results
- What the Performance Summary Does Not Show
- Some Avoidable Pitfalls in System Testing
- A Reality Check
- Appendix to Chapter 3 : Design Issues—Entry and Exit Strategies
Chapter 4: Developing New Trading Systems
- The Assumptions behind Trend-Following Systems
- The 65sma-3cc Trend-Following System
- Channel Breakout–Pullback Pattern
- An ADX Burst Trend-Seeking System
- Gold-Bond lntermarket System
- A Pattern for Bottom-Fishing
- Identifying Extraordinary Opportunities
- Performance Update: 65sma-3cc System
- ATR-Band Breakout Model
- Trading Stocks
- Appendix to Chapter 4 : Additional Performance Updates
- Chapter 5: Developing Trading System Variations
Chapter 6: Equity Curve Analysis
- Measuring the “Smoothness” of the Equity Curve
- Effect of Exits and Portfolio Strategies on Equity Curves
- Analysis of Monthly Equity Changes
- Effect of Filtering on the Equity Curve
- Modeling CTA Returns
- Stabilized Money Manager Rankings
- Mirror, Mirror on the Wall…
- Normalizing Returns
- Risk-Adjusted Measures of Performance
- Comparison of Risk-Adjusted Performance Measures
- Control Charts for Future Performance
Chapter 7: Ideas for Money Management
- The Risk of Ruin
- Interaction: System Design and Money Management
- Projecting Drawdowns
- Changing Bet Size After Winning or Losing
- Depth of Drawdowns for Actual Performance Records
- Estimating the Duration of Drawdowns
- Estimating Future Returns
- Chande Comfort Zone
- Dealing with Drawdowns
- ”Rescaling” Volatility
- A Calibration for Leverage
- Return-Efficiency Benchmarks
- Empty Diversification
- Risk and Reward in Stocks and Mutual Funds
- Chapter 8: Data Scrambling
Chapter 9: A System for Trading
- The Problem with Testing
- Paper Trading: Pros and Cons
- Do You Believe in Your System?
- Time Is Your Ally
- No Exceptions
- Full Traceability
- ”Guaranteed” Entry into Major Trends
- Starting Up
- Risk Control
- Do You Have a Plan?
- How Will You Monitor Compliance?
- Get It Off Your Chest!
- Focus on Your Trading
- Applications of Sports Psychology in Trading
- Trading with Your Head and Heart
- Appendix to Chapter 9 : Creating an Automated Diary of Trading Emotions
- Selected Bibliography
- Title: Beyond Technical Analysis: How to Develop and Implement a Winning Trading System, 2nd Edition
- Release date: May 2001
- Publisher(s): Wiley
- ISBN: 9780471415671
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