How tried and tested trading systems make money. In mathematics and computer science, any sample of data can be measured accurately, there are rules though, and especially regarding the fact that the same method used to gather the information must be used so the statistics are valid.

Trading systems can be tested and modelled because they are statistically valid and numerical, so ongoing modelling can be applied.

Typically in the past large banks and financial organisations used their huge budgets to develop teams of IT professionals, who’s main focus was creating ways of tracking monitoring and trading the financial markets without the aid of a human to make the decisions.

The costs of hiring and funding these projects ensured that it stayed in the control of the large institutions until computer software got smarter and computing power got so developed that a man with a laptop had more computing power than he could ever need.

This image displays the performance curve, developed from hundreds of trades, there is always a different result from each system and the top of the performance curve represents the largest returns created with the least amount of overall risk.

The red area is the optimum performance level and identifying trading systems that perform with consistent returns and low risk on the trading account measured.

This second image below displays the best results across a series of tests over a series of trading systems and we are looking to select the trading systems that deliver the most consistent optimised results.

The top of the performance curves are where the best systems qualify as robust, solid returns, controllable risk and negatively correlated against each other.

Small private businesses like Equitimax started to develop these automatic trading systems and algorithms and began the process of commercialising them and offering them in different product offerings to the investment community.

This use of new technology focuses on finding specific ways of creating new dynamic strategies that make money. Those systems that do not meet the profit targets required are rejected. Those systems that perform above average and therefore sit on the top of the curves are put into the mix so they can be added to the short list of trading systems used on live accounts.

These methods manage, control and make money for end users from the analysis of the financial data that is now freely available and gives Equitimax clients a real market edge.

Having access to the results from the trading algorithms placed on your trading account automatically using cutting edge computing power, added with new and innovative software programs, has started a technical revolution.

Many of the leading experts working in large financial institutions, left for the freedom to pursue their own ideas and visions of the future, as opposed to working for someone else on a big cumbersome project for years to come.

This of course has happened in health, infrastructure, telecommunications and software arenas as well as many others but it was the idea that you could get computers to make

money 24 hours a day, automatically, that grabbed a lot of expert’s attention: it is a rather grand and exciting notion after all.

The experts behind Equitimax created different trading portfolios that are constructed using the lowest expected return from the historical performance of the combined system results. What does this mean? It means that we cannot reduce risk but we are promoting and targeting achievable returns knowing that occasionally the results will achieve the top return potential and we will over perform.

This illustration displays the lower edge of the performance curves and you can see anything else we achieve is a bonus and creates larger returns.

These returns are then applied to three different risk models so a customer can select how much risk on each trade they want and of course the more risk the better the return.

This has been running as a commercial reality for years now and it is still going on today and does not look like it will stop anytime soon.

So how does it work really?

Well we can program a computer to transfer the different trading systems on the FX market, thousands of them and we check out further optimised versions of those.

The computer will run the data tick by tick, over 20 million data points a year per currency pair and work out when a specific movement occurs and it will place a trade when the condition occurs and can close the trade out when another condition occurs. The system can try 1,000’s of rules to enter a trade and try 1,000’s of rules to close a trade.

From all the systems tested, there will always be some that work well, and some that work best, these now go onto the short list for further testing and evaluation. The rest are discarded.

These systems are placed onto different samples (years) of financial data and onto other markets and financial instruments and measured and analysed, until the top few systems are ready to trade.

Then the trading system is programmed to trade the market live and just waits for the same conditions, that made money consistently before, and when this occurs it just enters the

trade automatically as the result of the signal or trigger, if it made money in the past, it should continue to make money into the future.

So no longer are the large financial institutions and banks using this technology as now there are small firms letting it out to the private trader and investor. Now you can access trading algorithms and systems, that have gone through the same process of development and testing

These trading systems alarms and signals are programmed using trading algorithms or trading robots to do a lot of the grunt work and these are now controlling up to 80% of the trades placed in some markets. With improvements in computers, software, computing power, data storage and internet access, now for the first time small private companies like Equitimax can develop the identical tools and infrastructure which deliver these trading services to private individuals and small investors.