re 3.

3: Result of the trading system LUXOR with added $30 slippage and commissio
n per
round turn. A: Detailed equity curve; B: Underwater equity curve. British pound/
US dollar
(FOREX), 30 minute bars, 21/10/2002-4/7/2008. Input parameters: SLOW=30, FAST=10
. System
without exits, always in the market. Chart from TradeStation 8.
A
B
The situation for the LUXOR-trading system seems to be hopeless. With this syste
m you
are far away from gaining any profits on the pound/dollar FOREX pair. Keep in mi
nd
however that we have just chosen two arbitrary input parameters. They could be s
uitable
or not. The key question which has to be answered now is: is this trading system
useless
48How to develop a trading system step-by-step
using the example of the British po
und/US dollar pair
overall, or is it a trading system that has its strengths but is suffering from
the
inappropriate choice of input parameters?
To answer this question more system tests like the one shown above will be neces
sary
for multiple different input parameters. In order to prepare these tests we firs
t want to
explain what we are looking for when