Many traders seldom go through detailed historical tests after developing strategies.Although the facts of history cannot verify the accuracy of the strategy in the future, after a strategy is formulated, if it cannot be tested in the fact that history has already occurred, then the starting point of this strategy is likely to have major problems.
For traders who have a good trading strategy, their trading strategies are either biased towards using fundamental analysis or biased towards technical analysis. Traders who can integrate the two in a complete strategy need a comprehensive knowledge structure, logical reasoning and patient testing, so such traders are relatively few.
The strategies brought about by fundamental analysis and technical analysis will give traders different difficulties in testing historical data.
• Strategy biased towards fundamental analysis
When a trader develops a strategy that favors fundamental analysis, traders need to use a large number of samples to test historical data. This is a cumbersome process that makes most traders unwilling or unsure of how to proceed.
When traders use historical data to test their trading strategies based on fundamental analysis, the first problem that needs to be addressed is how to easily find qualified samples from historical data. The following is an example.
Here we assume that the trader's strategy is that stocks with a P/E ratio between 15 and 25 are worth investing in.
To be continued.
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Philosophical thinking of financial transactions
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