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Edge Edge Edge.
Everyone talks about it, including myself, but what does it actually look like?
And Most Importantly how can you spot it?
Here's How:
Everyone talks about it, including myself, but what does it actually look like?
And Most Importantly how can you spot it?
Here's How:
Equity Curves:
These show the cumulative returns of your particular strategy over time.
You are looking for a steadily upward sloping equity curve, while avoiding the ones look more like a heart beat or a nosedive.
These show the cumulative returns of your particular strategy over time.
You are looking for a steadily upward sloping equity curve, while avoiding the ones look more like a heart beat or a nosedive.
Heatmap:
These are two-dimensional visual representation of returns using colors, where the colors all represent different returns.
You are looking for a consistent high return colors over the heatmap, with a clear direction of returns over time.
These are two-dimensional visual representation of returns using colors, where the colors all represent different returns.
You are looking for a consistent high return colors over the heatmap, with a clear direction of returns over time.
Monte Carlo:
These allow you to show the historical trades of your strategy reshuffled over time over 100s of different reshufflings.
You are looking for a your avg equity curve to be trending upwards, instead a mess of uncorrelated equity curves.
These allow you to show the historical trades of your strategy reshuffled over time over 100s of different reshufflings.
You are looking for a your avg equity curve to be trending upwards, instead a mess of uncorrelated equity curves.
It's super important to test and visualize your edge. Don't just rely on intuition - put your strategies to the test!
If you found this useful, give the tweet below a like.
Follow @GoshawkTrades for insights on backtesting / systematic trading
If you found this useful, give the tweet below a like.
Follow @GoshawkTrades for insights on backtesting / systematic trading
https://twitter.com/GoshawkTrades/status/1658198121254363145
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