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Evaluation and Stops

  • Jacinta ChanEmail author
Chapter

Abstract

The trading models must be periodically evaluated to trace common patterns in the profits and losses to look for methods to avoid unnecessary losing trades and to improve the timing of the winning trades. This will assess the fitness of the assigned parameters to the current market condition. The objective of the out-of-sample test is to confirm the trading instrument with the chosen strategy is the best choice. Another equally important consideration, money management is risk management with adequate capital. The most professional way to execute stop loss is to place stop order at the entry of a new position. If a stop loss of $6 had been used for N-CAMA′, the profits would have been 150 for in-sample period and 447 for evaluation period.

Keywords

Periodic profit/loss evaluation Money and capital management Out-of-sample test Stop loss 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.University of MalayaKuala LumpurMalaysia

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