What is optimisation?
SwingTrader uses the SST (Short Swing Trading) strategy which is a set of rules that determine when to enter a trade, where to place your stop loss and when to close the trade.
If trading a strategy "manually" you can only use one set of fairy rigid rules but using the enormous power of modern computers we can introduce much more flexibility into the strategy and achieve a level of sophistication we could not even imagine a few years ago.
We can have variable parameters and then ask the computer to back test each of those variables to see which settings have performed the best historically on any specific symbol (stock, Index etc). Why should we use say, a 50 Moving Average for everything when certain symbols have given much more reliable trades when using a 30 MA or a 43 MA?
So optimisation looks at all the variable settings in the strategy and automatically back tests every combination of these settings to come up with the very best settings to use for each individual symbol. A process that is simply impossible to carry out manually. "Manual" traders are always forced into trading a "compromise" version of a strategy whereas SwingTrader allows us to use an extremely specific version of the strategy that is ideally suited to the symbol we are trading.
It is therefore highly likely that if you have 30 stocks you wish to trade (in a watch list) you could end up trading 30 slightly different variations of the basic strategy, each one tailored to match that stock for optimum results.
The SwingTrader software does all this for you automatically behind the scenes so it remains extremely easy to use. You simply select the symbols you want to optimise and it will run the optimisation program in a few minutes (I can now optimise one stock in 44 seconds on a new dual core pc) or if you have a number to do and a slower pc you can set it up to do a list of symbols (stocks & Indices) overnight. Once you have optimised the symbols you wish to trade SwingTrader will have saved the optimised settings for you in order to provide you with trade entries, stop loss levels and exit points.
What difference can optimisation make?
The short answer is a huge difference! As a typical example I ran an evaluation (see separate page for explanation) on MGGT.L (UK stock) and looked at the back test results. I then ran a full optimisation and another back test. The % wins went up by over 10% and the gross profit more than doubled over the back test period and this is fairly typical. To make money trading we are often looking for very small improvements in our strategy or technique to give us a small edge over the market. The ability to optimise using the SwingTrader gives us some pretty large improvements and a huge advantage.