PMKing Trading LLC
The Trading System Lifecycle
***** OMG *****

Although it would be great if we could develop, test, and implement a trading system and then watch the cash roll in, trading systems never continue to perform well forever.  Every trading system goes through a distinct set of phases throughout its life, and these must be monitored and managed to make sure it is sensible to continue trading your system.


A trading system goes though the following stages:


  • Under Development
  • Being Testing
  • Being Traded
  • Suspended
  • Retired


Once a system has been developed and implemented, it has to be monitored closely for signs that it no longer works.  This eBook describes methods for system performance measurement and monitoring that will allow you to suspend a trading system when conditions are not favorable, or when the system is temporarily broken.  This can dramatically reduce the amount of capital the system loses during losing periods.


Also described is a technique for testing whether your system is no longer working and is unlikely to return to profitability so that it can be retired.


Each of these phases, and how to monitor and manage them, will now be described.  Please refer to the Trading System Lifecycle diagram on the following page.

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