Optimization
Definition of 'Optimization'In the context of technical analysis, it is the process of adjusting one's trading system in an attempt to make it more effective. These adjustments include changing the number of periods used in moving averages, changing the number of indicators used, or simply taking away what doesn't work. |
|
Investopedia explains 'Optimization'For example, if an investor has a simple trading system that is just composed of a crossover of closing price and a moving average, by changing the periods of the moving average, the trader will get different profits, risk, capital drawdowns, etc. Thus, optimization helps you to choose the optimal parameters to trade. |
Related Definitions
Articles Of Interest
-
Backtesting: Interpreting The Past
We offer some tips on this process that can help refine your current trading strategies. -
Weighted Moving Averages: The Basics
We take a closer look at the linearly weighted moving average and the exponentially smoothed moving average. -
Backtesting And Forward Testing: The Importance Of Correlation
Correlations between backtesting and forward performance testing results can help you optimize your trading system. -
Trading Systems Coding
Automate your trades by translating your strategy into a language your computer can implement in this hands-free approach to investing. -
Lessons From A Trader's Diary
Discover what this trader learned from his mistakes and how to uncover your own. -
Market Summary for May 24 2013
The major U.S. indices moved lower this week, ahead of the long Memorial Day weekend. After reaching all-time highs last week, many traders attributed the sell-off to a combination of profit ... -
What Type Of Trader Are You?
There are different ways stock traders attempt to profit from market movements. Which of the strategies do you use? -
Strong Volume Gainers, Can It Continue?
Volume is one of those indicators that gets overlooked, likely because it's shown by default on almost every chart, making it a little dull. But volume is what drives markets. Big volume jumps ... -
Market Summary For May 17, 2013
The U.S. stock markets moved sharply higher this week, on track for its fourth straight week of gains, driven by ongoing improvements in economic indicators. -
Parabolic SAR Buy Signals
The Parabolic SAR indicator is flashing "buy" in these four diverse stocks. Not simply relying on one indicator though, I take a look at the overall technical outlook and determine which ones ...
Free Annual Reports