Scientific Methods of Technical Analysis

SPEAKER:   Mathew Verdouw, CMT, CFTe

SESSION DESCRIPTION:  Technical Analysis has evolved with the trend towards more quantitative methodologies. The discipline is grounded in structuring objective rules and testing them for efficacy. The first port-of-call has always been the back test or system test, but is that the right place to start? What are the pitfalls of mining historical data for ideas?

The issue with an all-encompassing back test is that there are far too many variables to test for it to be considered valid. The tests usually become an alchemy of entry rules, exit rules, position sizing, stops, starting capital, and the list goes on. The result, while seemingly robust, is often difficult to repeat when implemented.

In this presentation, Mathew will look at a quantitative approach of running multiple tests to break the process into discrete steps. Starting at the signals, then the trades, then the full system test. Each step needs to be thoroughly examined to be sure that the results are statistically valid. We'll also cover some statistics, in plain English, and discuss how to build an accurate sample distribution to compare against our test results.

For any Analyst who wants to research new ideas or be able to present ideas that can stand up to rigorous quantitative scrutiny, this presentation will help you see that not only is a quantitative approach achievable, but as Technical Analysts, we are in the best position to drive quantitative models.

MATHEW VERDOUW, CMT, CFT  – Computer Systems Engineer, Optuma

Mathew Verdouw, CMT, CFTe, has been living and breathing Technical Analysis for over 21 years. As a Computer Systems Engineer he wrote his own TA platform —which has been used all over the world from private traders to major US firms.  More recently, Mathew has become the only person in the world to currently teach the latest curriculum of all three levels of the CMT program. His broad exposure to Technical Analysis and his engineering background has led to many new insights and brand-new ways to model analysis. 
Mathew is a staunch believer that there are still many new discoveries to be made in the area of Technical Analysis “TA’s best days are ahead of us, not behind us”.

Barbara where he received B.A. degrees in both Business Economics and Chemistry. He is Series 7 & 63 licensed and is a Chartered Market Technician (CMT).