The key to effective system development is an understanding of what each component of a trading system contributes to in terms of the trait or behavior of the system, and how these relate to your overall objectives.

This mini-eBook describes the main system objectives:

• Implementation Costs
• Risk & Reward
• Expectancy

How they relate to each main system trait:

• Commission
• Slippage
• Trade Frequency
• Cash Made
• Risk of Ruin
• Win Percentage
• Average Winner Size
• Average Loser Size
• Average Trade Duration

And how each system component determines the overall personality of the system:

• Market & Instrument Type
• Instrument Filter
• Setup & Entry
• Position Sizing
• Exit Strategy

If you clearly understand how each component of your system effects its behavior you have a much better chance of developing systems that exactly meet your objectives.