First, fire up your thinkorswim platform and go to the Charts tab. Let’s lean on thinkorswim ® and a spreadsheet to test the strategies. No guarantees, but using these metrics is another smart way of strategy testing before committing real dollars and getting waiters used to large tips.
Three metrics can help you see the various possible paths and make more informed choices. Wouldn’t it be nice to anticipate and plan for potential variations with actual data and not with a bunch of guesses before committing to a strategy? There is. And maybe the last oscillated up and down 10% every month, and you’re now just seeing the up-10% oscillation before the next down 10%. Maybe another was up 40% until a few weeks prior, and then gave back most of the profit very quickly. Maybe one earned just under 1% return per month, every month, for the year. Because all three might have had different risks, and had arrived at that 10% return along different paths. They all involved buying and selling stock, and using technical analysis, as well as using stop losses. For example, consider three strategies, each of which had a 10% return in the previous year. But if you choose a trading strategy like that you could be in for some bitter financial surprises.
One quick wine pick won’t make or break you. After all, they’re red, about the same price, and will taste more or less like wine. “Gimme the middle one,” you say without much thought. The sommelier recommends three Bordeaux wines, each a great match for your dinner.
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