EdgeWare FastBreak Pro Version 6.2 - Manual (Page 13)

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to try, and this is why FastBreak Pro uses a very sophisticated genetic algorithm (GA) to
evolve the parameter choices.
Determining optimized parameters that maximize your investment objectives is only part
of the problem. Trading system developers must constantly be wary of “over-
optimization” or “curve-fitting” of parameters. FastBreak Pro avoids over-optimization
by using various techniques, but the most important technique is automated “walk
forward” or out-of-sample testing. This simply means that a portion of recent historical
data is used to test and confirm that the trading system continues to have good predictive
performance. The user can actually watch and see when over-optimization is starting to
occur during the optimization process.
When FastBreak Pro has completed the optimization process, you can automatically save
the best trading system parameters. These trading parameters can be loaded with a couple
of mouse clicks into FastBreak Pro and run on a daily basis to determine if any trades are
to be made. Trades are mechanical, that is, the specific funds to buy and sell are named
on specific dates.
The professional money manager or individual investor can quickly use FastBreak Pro to
develop numerous trading systems. The money manager may have a need to develop
trading strategies that meet the risk tolerance of various clients. For example, one client
or group of clients may have a high risk tolerance and want to maximize annual returns.
A second set of clients may be very risk averse and be satisfied with reduced returns to
obtain that reduced risk.
The money manager can specify the level of risk and let
FastBreak Pro determine the trading parameters.
The individual investor may have a need for a variety of trading systems. For example,
an individual may want to have a small portion of his investments in a very aggressive
trading system, a larger amount in a more conservative system, a third portion always
invested in international funds, a fourth account with an annuity company, and finally, a
portion in bond funds. FastBreak Pro can quickly and easily allow the investor to develop
trading systems for each of these accounts and modify or re-optimize the trading systems
in the future as new mutual funds become available.