The following is a series of system tests where we measured the performance of each system using the following parameters:

• Base equity of $15,000
• Trades long and short
• Only one position at a time
• 50% of the equity used for each trade
• Commissions are at 1% of transaction cost
• Interest rate on unused capital 3% and 5% on margin
• Close all positions at end of test
• Margin requirement 100%
• Selected security: Lexar Media
• Trade range from 08/15/2000 to 08/20/2003

Other considerations

Lexar was used because it exhibited clean trends. More test were carried over 7,000 securities of the NYSE, ASE and NASDAQ. The results were showing that the AlphOmega System AOi Fast with DMA exit outperformed most other systems although not that dramatically. These tests were carried to find how our system performed against a broad range of other system. No optimization was allowed for the systems. Changing some of the parameters altered drastically the results for all systems but  the ranking was maintained for all the changes.

The following screenshots were not modified to enhance or hide any information. These tests do not imply that the risk is smaller. Nor is it a representation to buy or sell securities or trade any market. The study is for statistical purpose and may yield different results with other parameters.

 

Ranking

 

System Summary

 

Equity Line

 

Lexar Media Inc.

 

Although spectacular, the results will vary greatly with each market or security. The risk is still very high, particularly when you reinvest 50% of your capital in each trade. The elements you should consider when testing a system are:

• Parameters
• Number of good trades versus bad trades
• Drawdown
• Average profit per trade
• Reward/Risk index
• Smooth upward equity line