New Trading System Ready for Testing

In my June 1st posting I state:

And in trading system news, I believe I'm about 1 month away from testing another trading system.  I haven't figured out if I want to use options or just plain stock yet.  It's a quick "in and out" type trading system with a maximum hold time of about 10 sessions.  It may be tough to overcome the option spreads in so little time. This is what testing is for though.  I may test with both vehicles and see which one makes the most sense.  I'll share results here. 

Welp, I'm ready to go live and I've decided to go with options.  I've made some slight modifications to the system to support more liquid contracts which resulted in less symbols in the watchlist which increased the hold time and reduced the number of trades.  The selection of options over stock has also increased my hold time because part of the adaptation results in being short theta (i.e. drawing benefit from time decay).

So the testing will begin.  As I've mentioned before, backtesting results do not always translate well into the real world.  There are a number of reasons for it, curve fitting, data mining and emotions all come into play.  So I like to take it slow and enter in with single contract positions.  I'll share my entries and exits along with the options strategy.  I'll lag my actual entries because I don't want anyone to stupidly follow me.

This is the testing phase!  It will probably take several months (if I'm lucky) to put any real money from my speculative pot into this idea.  This is also a low frequency trading system.  Again, most of the benefit is drawn from letting short options expire.  When I enter the trade, I'll feel that there's a high probability that the current price will hold, increase or decrease slightly over the next month.  I expect the system to average one trade per month.  And I do mean average because we could go 5 months without a trade and then get 5 trades in a month.

Be warned, few of my trading system ideas make it to the testing phase and even fewer make it beyond testing.