Cmt learning objective 37 system trading & testing - copy

This document discusses system design and testing for trading systems. It covers the importance of using a systematic approach to trading rather than discretionary decisions. Key points include: - Discretionary vs. non-discretionary systems are compared, with benefits of the latter including avoiding emotions and having a set structure. - A complete trading system requires decisions around markets, position sizing, entries, stops, exits and tactics. - Proper testing of a system is essential and involves using clean accurate data, addressing issues for futures data, exploring different testing methods, optimizing parameters within a range, and out-of-sample testing.