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Charting Secrets: Trade Like a Machine and Finally Beat the Markets Using These Bulletproof Strategies, 2nd Edition by Louise Bedford

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Appendix B: Back-testing

In this appendix, we will examine the research required to effectively back-test a trading system. Conducting in-depth research using technical analysis techniques can be quite a complex task. You should set some objectives and consider the following:

1 Establish your term for trading: intra-day; short term — one day to three weeks; medium term — two to 40 weeks; long term — nine or more months.

2 Direction of trade: long or short, or both.

3 Market to trade: equities, equity derivatives, index futures or derivatives, foreign exchange, commodity futures or bonds. Essentially you need to decide whether you wish to trade leveraged or non-leveraged markets. When you are starting, it is best to trade non-leveraged areas ...

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