This is intended to accomplish a systematic and detailed analysis of the individual components that make up a complete trading system. We are proposing nothing less than a scientific study of entries, exits, and other trading system elements. The basic substance of the scientific approach as applied herein is as f0110ws:
1. The object of study, in this case a trading system (or one or more of its elements), must be either directly or indirectly observable, preferably
without dependence on subjective judgment, something easily achieved with proper testing and simulation software when working with complete
mechanical trading systems.
2. An orderly means for assessing the behavior of the object of study must
be available, which, in the case of trading systems, is back-testing over
long periods of historical data, together with, if appropriate, the application of various models of statistical inference, the aim of the latter being to provide a fix or reckoning of how likely a system is to hold up in the future and on different samples of data.
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