What is a System Health Monitor?

What is a System Health Monitor?

 

How do you know if your system is in a drawdown or is broken? The answer is you don’t.

This is why you need to be monitoring your system at all times and at some point you will have to just step aside and watch.

Here is what Howard Bandy has to say about monitoring system health.

“Use of the equity curve is done in two steps:

“1. Keep track of all of the trades that are signaled, and the equity curve produced by these trades. Call these the “shadow” trades and the “shadow” equity curve.

“2. Apply some technical analysis technique to the shadow equity curve as if that is a price series. When the results of “trading” the equity curve are good, take the signals generated by the base system. When they are poor, remain flat.

“Trading the equity curve is essentially the same as trading a price series. Apply any indicator you want to the daily equity. The equity curve is defined to be “good” when it is above its moving average, and “poor” when below. When it is good, signals from the basic system are passed through; when it is poor, all signals are blocked.”

Here at AlgoTrader we call this System Health Monitor.

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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

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