January 2007
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eASCTrend’s Trading Algorithms Are Validated by a Full Decade of Rigorous Back Testing

 
   
By Dr. John Wang
 
   

You want your trading system to offer certain key advantages. You want it to:

  • Be easy to use
  • Make clear recommendations for when to buy, when to sell and where to place your stops
  • Have a proven track record in both customer satisfaction and long-term validation of the algorithms it uses to produce recommendations

eASCTrend -- The Online Trading System That Meets ALL These Requirements...

  • Is easy to use: Just call up the chart of a stock, commodity or other market you want to trade; apply our analysis with one click of your mouse; contact your broker when the signals appear. You can even have the software alert you when it’s time to act!
  • Offers clear recommendations: Because our buy and sell recommendations are based on mathematical formulas, they provide specific prices that we mark on your chart with easy-to-spot dots. Buy on blue. Sell on red. It’s as clear-cut as that.
  • Has a proven track record: First, our record of customer satisfaction is unbeatable. We’ve won a “Readers’ Choice Award” from Stocks & Commodities -- one of the most reputable magazines in the industry -- for 10 straight years.

And, even better, in developing eASCTrend, my team and I back tested the system for years in a many markets: Stocks, commodities, Forex and more. We refined our equations until they met our own exacting standards. Our algorithms have been put to the test, and they have proved their effectiveness.

And, because eASCTrend is back-testable, you can personally test it out for yourself. You don’t have to rely on me, or anyone else, to tell you whether the system is right for you.

Test it as much as you want -- in any market you want. And, find out for yourself whether eASCTrend is as good as I say it is.

Figure 1

Back Testing -- Your Key to Trading Confidence

No trading system can guarantee that you’ll make money. And, past performance is not necessarily an indication of future results. If any trading software publisher tells you otherwise, you should run for the hills as fast as you can!

But, eASCTrend has been rigorously back tested -- as far back as 10 years. And, all these tests validate that the signals generated by eASCTrend produced phenomenal performance.

Has your trading software been validated through back testing?

Some trading software publishers do little or no back testing. But, that’s a mistake..and a red flag that screams, “Buyer, beware!”

Here’s why...

Trading software programmers design algorithms we think are the most accurate predictors of future prices -- for markets as well as individual equities and commodities -- based on the best knowledge available to us today.

However, obviously there is no way to “test” whether our software will accurately predict the future before we sell it to you -- because the future hasn’t happened yet.

But, the past has happened. And, complete price histories are readily available in databases we can access.

So, in back testing, we take historical data . . . and process it with the exact same algorithm we would use for analyzing today’s data.

The algorithm then generates buy and sell signals. And, because these buy and sell signals are applied to real price movements that have already taken place, we can check whether the price subsequently rose or fell as the algorithm predicted.

This, in turn, reveals whether we would have seen a profit or a loss on our trade if we had followed the signals the system would have generated.

Because the eASCTrend trading signals are precise and mechanical in recommending exactly when to buy and when to sell (and do not require any interpretation), it’s easy to set up hypothetical trades. And, this is what we’ve done, over and over again, for more than 10 years -- testing and retesting our software.

Figure 2

Back Testing -- the Only Way to Validate a System’s Algorithms

Let me tell you a little about myself, so you’ll understand why I’m well aware of what traders need and why I have the know-how to create and validate award-winning trading software.

I was a trader myself for years before I developed eASCTrend. I’m also a trained scientist. So, it made sense to me that a trading system based on scientific and mathematical principles would be of value. Hoping that such a system was already available, for a long time, I tried using other programs on the market that were promoted as being a boon to traders.

But, I was disappointed by these trading systems again and again. They didn’t perform as promised. Many of them lost me much more money than they made me. And, they didn’t provide precise signals. I had to figure out too much on my own.

I finally decided to take on the challenge of solving the problem myself by doing something you might expect of a trader who is also a scientist and computer programmer...

I designed and wrote my own trading software!

And, it wasn’t easy.

Despite my background in mathematics, physics and computer science, devising the algorithms that would give reliable and precise trading instructions in all major markets was a bear of a project.

My team and I worked on it for years. And, then, to make sure that the algorithms we developed were valid, we exhaustively back tested our software on the Forex, Russell 2000 and a dozen other markets favored by traders.

It’s the back testing that makes our software stand out from the rest.

You see, an indicator software program, such as eASCTrend, is a trading system that uses colored lights or bars to tell you when to make a trade. A number of indicator software programs are on the market. But, unlike eASCTrend, they lack back testing capability.

How can you, as a trader, trust colored bars, lights or any other indicators that have not been validated through extensive back testing? If you blindly follow unproved signals, you are just trading in the dark -- and that can be very costly.

eASCTrend’s back testing capability has not only allowed us to validate our algorithms, but it enables you to do your own back testing, if  you wish, so you can validate your signals and strategies before you risk your hard-earned money.

The following chart shows you an example of trade-by-trade back testing for QQQQ, which allows users to verify the trading strategy. The software can also show performance summary reports, which include total net profit, maximum draw-down, winning rate, number of consecutive winning trades, number of consecutive losing trades and profit factor.

Figure 4

As you can imagine, developing algorithms and subjecting them to rigorous back testing is tedious work. Fortunately for you, my team and I have done this work for more than 10 years so that you can benefit from the fruits of our labor.

If you like to test things out for yourself, and you want to do your own back testing to test out different markets or try different parameter settings, we’ve made that simple to do. We’ve programmed an easy-to-use back testing feature into our software.

But, whether you decide to do your own back testing or not, isn’t it nice that, with eASCTrend, you have the comfort of knowing that we’ve done the back testing? That’s what gives your trading the eASCTrend edge.

Dr. John Wang, CEO and co-founder of AbleSys, as well as the creator of ASCTrend indicators and the eASCTrend trading system, holds a Ph.D. in physical chemistry and has been trading commodities since 1990. He is a registered Commodity Trading Advisor (CTA) with the Commodity Futures Trading Commission (CFTC). Use this 50 percent discount code for a 30-day trial: EMBE84.

Important Disclaimer: Futures, options and securities trading has risk of loss and may not be suitable for all persons. No system can guarantee profits or freedom from loss. Past results are not necessarily indicative of future results. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The charts were created in eASCTrend 6.0 and are for easy illustration and easy understanding. Detailed chart settings and detailed trading methods are covered in the AbleSys member login area.

 

 
 

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