Technical Analysis: Future Study
Cliff Wachtel · 2012
A central principle of good teaching is that it gives the student a clear path on which to continue once the teacher exits. A common fault in trading books is that either they provide insufficient guidance about what to learn next or they presume that they've taught everything that's needed to be successful. Unfortunately that's impossible to do. This chapter introduces the next level of technical analysis which is helpful to expand analytical skills and find the trading style that best fits us. Back testing is one of the software which works by simulating trades when the programmed signals or conditions appear on the historical price data. The goal is to test the system's potential profitability and maximum drawdown or risk over the given historical data. Computerized back testing works for technical trading strategies as long as their rules are clear and unambiguous enough to be translated into programming code.