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good for a fast scalp. Not much could be said for a fundamental trader because this is mathematical methodology. |
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Neal: What should traders look for when choosing software? |
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Mike: Choosing software to trade is a very tricky task. Do not rely solely on such third-party reviews as Futures Truth. They are only part of the equation. The user should ask the software provider what the data source was when the software model was back-tested. This might also reveal such things as whether the developer used actual contract data as opposed to continuously generated contract data. I have found vast differences when applying the two approaches. My software has a rollover feature which painstakingly applies actual contract data and will ask the user when to roll-over into the expiration month. TradeStation does not provide that kind of option. Watch out! The aspect of drawdown can mean different things to different people. I have found that some software developers actually use closed-position drawdown and do not mark to market-open drawdown, which simulates a real-life situation. A good software package will provide an ASCII data option, since most data vendors allow you to convert their particular format into ASCII data. This is a universally accepted data format which can be readily imported into any text editor. |
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Neal: And what about the developer? |
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Mike: Developers should provide full disclosure of their methodologies. Avoid those ''black boxes." I have found that most vendors generate their code into a black box when they are either copying a strategy from a book or curve-fitting a specific trade occurrence somewhere in the past. By generating a "white box," the end-user will experience a higher comfort level. Otherwise, you simply can't trust the software. In addition, if the programmer had errors in the software, you would have no way to cross-check his results. It is important to know how many parameters the system is using. Any- |
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