Testing Signal Efficacy by Jeff Parent
Here’s how you can evaluate how effective
your trading system is.
ot unlike new pharmaceutical
drugs, buy and sell
signals must be put
through rigorous tests to
determine their usefulness.
Only when signals
prove profitable repeatedly
should the indicator being tested be
incorporated into a trading system. But how
can you quantify how effective your signal is?
In this article I will suggest a standardized
process to achieve this goal.