The Personal Side to Trading System Development (Part 1)

Are you familiar with the “Dummies” series of books? I would love to see such a book on trading system development but the truth is that I don’t know if such a book could even be written. That is, System Development for Dummies can’t truly be written because what it is and how to do it vary too much from one person to the next.

I have already addressed subjectivity in system development in some earlier blog posts. Howard Bandy’s books define and discuss the objective function. It struck me that “subjective function” might be a better name after realizing the irony that where system development and backtesting sound like scientific endeavors, since the measure of success varies from one person to the next perhaps there’s nothing objective about them at all.

Some of this subjectivity boils down to a distinction between generality and specificity of knowledge. I can find many general articles on-line about law and the legal profession. If I am trying to find out about something related strictly to Family Law, for example, then the articles will be fewer in number. If I am trying to assess how good one particular lawyer is then I may never find anything outside of that lawyer’s website where the testimonials will certainly be from friends, not foes. Bottom line: the more specific the knowledge, the harder it may be to find it.

Education about system development starts with what I can read in books. Authors of different books use different software packages, though. Use of one software package limits what I can glean from an author who uses another because anything about the programming language, backtesting capabilities, and even system development definitions may be different.

I will continue this discussion in the next post.