Using Performance Metrics in the Optimisation Process

Performance Metrics are a great way of comparing different strategies. We wrote about some of these performance metrics in a previous post.

But is it possible to use performance metrics in the optimisation phase of strategy development? A performance metric is just a way of measuring the success of something. So, it makes sense that you can use performance metrics to measure the performance of a strategy and the components of the strategy.

Experiment

It’s healthy for Traders to explore new ideas and ways of implementing those ideas. Trading Strategy Development can be a creative process. Just because an idea is unique doesn’t mean it will be a success, but you only learn what works by first learning what doesn’t work.

It is also a good idea not to limit yourself to one idea or process. You should perform a range of comparisons and see which one looks the most robust.

Question why you think it works and the others don’t. By constantly trying new things and questioning the results, you will improve your understanding.

This process is helpful because the more you understand, the better equipped you’ll be to adapt to an ever-changing market.

Martyn has provided an example of using Van Tharp’s SQN in the optimisation process instead of comparing trading strategies. Similarly, Darwinex supplies various proprietary metrics that can help a trader analyse and optimise their trading strategy.

Do you use Performance Metrics in the Optimisation Process? Let us know how you get creative on Twitter @Darwinexchange.

Brought to you by Darwinex: UK FCA Regulated Broker, Asset Manager & Trader Exchange where Traders can legally attract Investor Capital and charge Performance Fees.

Risk disclosure:
https://www.darwinex.com/legal/risk-disclaimer


Content Disclaimer: The contents of this video (and all other videos by the presenter) are for educational purposes only and are not to be construed as financial and/or investment advice.

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