John Jeffery

There are many different methods available to traders and investors when it comes to predicting future price movements. Anyone who is trading equities or their associated derivatives will know that an integrated approach (combining technical analysis with fundamental analysis) is by far the most accurate and therefore the most desirable. Of course, there are instruments which can be traded which do not lend themselves to these techniques; things like currencies, futures and indices. When faced with these challenges, how should the trader adapt?

There are always a few common mistakes that are made when implementing a trading system. These range from excessive positive expectation leading to over leverage all the way to a lack of preparation and system testing. Indeed, often the actual system itself leaves a lot to be desired in terms of the logic that supports it and the market conditions it is implemented through. In this article we will look at a method of back testing and some important components to be considered in developing a trading method.

In the early 1980’s a trader and a psychiatrist were having an ongoing dispute as to whether great traders were born or created. In order to resolve their positions the pair suggested that they recruit and train several individuals, provide them with accounts and see how they faired. The two having the argument were Richard Dennis and Bill Eckhardt and the subsequent experiment became the very famous ‘Turtle Traders’.