Note: All the credit goes to the original author, Detlev Matthes, if you are interested in reading his original paper then click here. This article contains large excerpts from his original paper.

Abstract

A key performance indicator with high explanatory value

for the quality of trading systems is introduced. Quality is

expressed as an indicator and comprises the individual values of

qualitative aspects. The work developing the KPI was submitted

for the 2017 VTAD Award and won first prize.

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Introduction

Imagine that you have a variety of stock trading systems from

which to select. During backtesting, each trading system will

deliver different results with regard to its indicators (depending

on, inter alia, its parameters and the stock used). You will also

get different forms of progression for profit development. It

requires great experience to select the “best” trading system

from this variety of information (provided by several indicators)

and significantly varying equity progression forms.

In this paper, an indicator will be introduced that expresses

the quality of a trading system in just one figure. With such an

indicator, you can view the results of one backtest at a glance

and also more easily compare a variety of backtesting results

with one another.

How to Use the KPI

The team at TradingDelta is dedicated to providing useful content

and education regarding technical analysis, systems building, and

portfolio management. This is why we have programmed the KPI

indicator to be available on the TradingView platform, FREE OF CHARGE!

If you are interested in using the KPI Indicator to test your strategies then click here!

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Conclusion

The KPI developed has high explanatory value for the quality

of a trading system. Individual aspect values (from different

areas of focus) provide further information useful for improving

the quality of a trading system. Users can use the KPI value and

its aspect values during the development of trading systems.

Further, application during parameter optimization and as a

monitoring measure during practical trading is possible. The

KPI introduced was implemented in the programming language

Equilla and can be used in the trading environment Tradesignal.

The original paper (in German), containing many examples

and the programming code, is available on the VTAD website:

http://www.vtad.de/node/11524.

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