3.3.3 Inspection strategy (3)

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Strategy biased towards technical analysis

When traders have developed a strategy that favors technical analysis, they also face problems similar to those of “strategies that favor fundamental analysis”. It's just that the details are different.

When a trader develops a strategy that favors technical analysis, the first problem that needs to be addressed is how to easily find the eligible data from the historical data of the sample.

Here we assume that the trader's strategy is: the 10-day average price moves from the downtrend to the buy-in time point, and the 10-day average price shifts from the rise to the fall when it is the sell time.

When a trader browses the relevant historical data of Lido Machinery (the company virtualized in this article), it will encounter a large number of data that meets the condition during the stock price fluctuation process of the company, and the data appears to have no time regularity. Therefore, it is necessary to pick the investment process one by one, or to interpret the investment process through rigorous data operations. This is a very sophisticated and complicated work, and its workload is relatively large.

Secondly, the strategy biased towards technical analysis will also encounter a second problem similar to the fundamental analysis, which is the question of how many samples are needed for historical data testing.

For example, if the strategy based on technical analysis is applied to all publicly traded stocks of NYSE, then the basic data may be more than billion . If further calculations are made, then the total The amount of data is amazing. The data is put into the rules of the strategy to test, the difficulty level and workload can be imagined. Although this test method is the most comprehensive and accurate, no individual will pay for it.

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