Forum Archive Index - April 2004

["trader 100" <trader_100@hotmail.com>]

Phaedrus,

I continue to learn a lot from your posts.  Thanks for the time you put into 
them.

I have a system that I trade on ASX stocks that I comfortable with.  I run 
the Metastock explorer each day to get a list of stocks that meet my general 
criteria, inspect their charts and execute the trade.  This approach works 
well for me because it is an effective filter on the large number of ASX 
stocks.  I only review about 20-30 charts each day so the time commitment 
isn’t large.

However, the more I read about TA, the more I am convinced of the merits of 
an approach that differs from my current “one size fits all” ASX system.  I 
plan to select 20-30 NZX stocks and design a system for each one.  Obviously 
two of the key components of this are the selection of the indicators to use 
and the optimisation of the parameters of each indicator.

I don’t expert you to divulge all the knowledge you have built up in this 
area but I wonder if you could provide us with an example about how you 
would go about designing a system for a NZX stock like FBU.

In particular I am unsure of the following:
1. The appropriate periods to use for the optimisation and out-of-sample 
testing.
2. How to restrict Metastock to a certain period of time to conduct each 
aspect of 1. rather than running over all the data.
3. The interrelationship between the choice of indicator(s) and the 
optimisation.  Do you find the best indicator using default parameters and 
then optimise that indicator or should the optimisation process be more 
dynamic than this.
4. The number of different indicators one should try an incorporate.  My 
natural inclination is to keep things as simple as possible, and I note that 
a simple RSI system seems to work well for FBU, but I am sure that using 
several indicators has its advantages.

Thanks for considering this.

Regards,

T100.

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