Beyond Technical Analysis: How to Develop and Implement a Winning Trading System

If you want to achieve enduring trading success then it?s essential that you create a winning trading system, control your risks, and withstand the psychological pressure of the markets. Whether a beginner or an expert, now you can reap profits from stocks or futures using the proven trading systems, robust risk-control methods, and powerful new tools from sports psychology in the updated and expanded second edition of Beyond Technical Analysis.

Written by successful Commodity Trading Advisor and acclaimed system developer Tushar Chande, Beyond Technical Analysis takes you step-by-step through the process of creating trading systems that match your trading beliefs and profit objectives. Offering a stimulating mix of cutting-edge techniques, timeless principles, and practical guidelines, the second edition will enable you to develop and implement customized systems that carefully balance risk and reward. It bridges the gap between analysis and trading so that you can acquire the competencies needed for consistent profitability.

For beginners, the second edition of Beyond Technical Analysis provides an easy and effective introduction to building superior trading systems, including an overview of entry and exit strategies, a detailed review of testing techniques, and an all-new primer on technical analysis.

Experts will be introduced to the Chande Comfort Zone that uses new tools for estimating expected returns, depth of drawdowns, and duration of drawdowns. Also, Chande gives a true out-of-sample performance update of the systems presented in the first edition, highlighting how these systems have stood the test of time.

For investors and allocators, Chande shows how to benchmark performance, stabilize manager rankings, build more efficient portfolios, and create specific risk control plans for monitoring performance.

With this comprehensive book, you?ll also learn how to: *Find entries and exits consistent with your trading beliefs *Avoid common pitfalls in system testing *Write and test trading systems using commercial software *Correctly interpret test results *Create profitable trading strategies *Define, control, and manage risk *Manage trading stress using sports psychology *Focus on disciplined execution

A complete and thorough guide, Beyond Technical Analysis, Second Edition will help you build robust trading systems and follow sound money management and risk control techniques that will give you the winning edge.

Table of Contents

Preface.

Developing and Implementing Trading Systems.

Principles of Trading System Design.

Foundations of System Design.

Developing New Trading Systems.

Developing Trading System Variations.

Equity Curve Analysis.

Ideas for Money Management.

Data Scrambling.

A System for Trading.

Selected Bibliography.

Index.

Excerpt

The new edition reflects my intense experiences as a Commodity Trading Advisor (CTA), developing systems, trading over 60 futures markets around the world and marketing services to clients. The additions to the second edition spring from my research to find effective answers to clients' questions about trading systems, risk control procedures, and expectations of future performance. For example, try giving a simple answer to the question, "What's a 'good' benchmark for performance comparisons of CTAs, hedge funds, and stocks?" I developed tools for comparing managers, analyzing equity curves, quantifying risk-adjusted performance, estimating drawdown risk, and projecting expected returns. These too s have been tested and accepted by many large allocators in the managed futures business and can be applied to stock indexes and mutual funds. Hence, they should be useful to many investors and allocators.

As part of the 24/7/365 experiences of a CTA, I faced my share of difficult markets and learned unforgettable lessons about the applications of sports psychology to the trading environment. Research by psychologists into the state of "flow" is a so useful to build a framework for analyzing trader's reactions to the stresses of trading. This additional material in the second edition summarizes insights gained the expensive way. You can use it to cope with the inevitable stresses of trading.

In presentations to clients, there is rarely enough time to explain the nuances of design tradeoffs. Hence, marketing necessities led to the development of simplified schemes for classifying entry and exit strategies and system designs to explain the strengths of trading strategies. These classification schemes may be useful to you in your own iterations.

The new edition allowed me to give a true out-of-sample performance update for systems discussed in the first edition, and to show how to trade futures as we as stocks with the same system. This edition a so includes an illustration of how CTAs derive their returns, and how to develop stabilized money-manager rankings. A review section of the basics of technical analysis is included at the request of many readers.