The method of optimising involves changing the technical analysis variables to increase the effectiveness of a trading strategy. A trading system can be made more efficient by lowering some transaction costs or hazards or by focusing on assets with higher projected returns.

 

An optimization aims to modify one's trading system to increase its effectiveness. Systems must constantly adjust to hit a moving target for optimization to succeed. The optimization process is ongoing and includes everything from changing the number of periods in moving averages to just getting rid of ineffective strategies.

 

Using optimization by traders – An Overview

 

Depending on the presumptions supporting an optimization method, there may be several ways to optimise. To take advantage of expected market swings, some traders could optimise their technique with a lot of short-term bets.

 

Others may achieve optimization by limiting their trades to lower their transaction costs. In either scenario, the investor's/trader’s ability to accurately identify the risks, expenses, and possible rewards of their approach will determine how successful their optimization method is.

 

By optimising, the traders may quickly determine whether their back test is based on chance or randomness. By altering the number of days in the moving average, the traders can improve a trading strategy that goes long when the price breaks above the 25-day moving average.

 

A strong sign that the initial method was most likely based on chance and unpredictability is when the results are much poorer near to 25 days. As a result, future success is unlikely to be great.