EdgeWare FastBreak Pro Version 5 - Manual (Page 55)

55
Annual
return MDD UPI Beta Alpha
89.6 18.8 9.9 1.5 97.8
The S&P lost 12% and the OTC lost 45% over this same period. Note: You should not
expect to see actual trading results that outperform the general market as much as this
example because this is the best system of the best generation. However, if you look at
the worst OS performance on the Summary screen you will see that, except for the first
generation, the results are significantly above the market indexes.
Note: This particular strategy was built without benefit of any significant bear market
data because it was built prior to the extreme bear markets of 2001 and 2002. You will
find that when the strategy was tested in these markets, the MDD was significant, but
the recovery in 2003 was equally dramatic. This strategy may be one to use only under
favorable market conditions.
Note: If you use a stock family that is based on a market index, e.g., S&P 500,
NASDAQ 100 etc., see the discussion that follows.
Because FastTrack will update the index families on a regular basis, you have a decision
to make. First, you could use the default family, and when the family is updated, you
may get dramatic changes. For example, you may run the strategy and find that the
strategy has been holding two new stocks for several days or weeks that are different
from the stocks you were holding when you ran the strategy the previous day. At this
point, you would need to sell your current positions and purchase the stocks the strategy
is currently holding. The detail file and FNU equity curve will not accurately represent
your actual performance. Although this may be disconcerting, this is our preferred
method.
Another way to work with the changing index is to save the FastTrack index family used
to build the strategy under a unique name in your user defined family folder. Now the
stocks in the family will remain constant. There are two problems with the method.
First, stocks are constantly being deleted from the FastTrack stock database due to
mergers, bankruptcies, name changes etc. Therefore, you will still see surprising changes
in your strategy, but they will occur less often than when using the preferred method
above. The second problem with the approach is that you will lose the normal upgrading
that occurs to the index over time, i.e., NASDAQ removes poor performing stocks and
adds better performing stocks.