Types of robustness that a trading system requires

We are in the age of digital technology dominating every industry possible. Bots are ruling various domains. And trading is no exception. When we talk about using an automated system or a bot there is one benefit that is commonly discussed and that is the robustness of the system that comes with the reliability factor. But with trading there is a thin line between agility of the system and the robustness required. There are volatilities in the market and different instruments react differently to these changes. There are various indices that collate the performance of the markets. And the relationship that each instrument has with these indices might be different. All these factors put together would help a trader take the best trading decisions. There are now various trading systems like HBSwiss.com where beginners can effortlessly trade without even knowing how to trade.

So getting back to the robustness concept, what are the types of robustness that a trading system is expected to incorporate?

Robustness in timeframe

The trading system or a trading strategy that you have developed should be able to give the predicted results no matter which timeframe you choose for it to be called timeframe robust. This is however not possible practically. The incorporated indicators and the decision making strategy might differ for short term movements and long term trends. The essential factor is to pick an ideal timeframe to trade with the chosen system or strategy.

Robust in optimisation

Curve fitting might not be good as the system might not really be future ready when the parameter value changes in the course of time. In trading back testing is only a possible way to test the strategy but a strategy that works with the data from the past might not always work on data in the future. The system that is robust in optimisation would be one that is able to reduce the chances of curve fitting and increase the possibility of optimisation while maximising the objective function.

Robust irrespective of the chosen instrument

As the name indicates this is a system or strategy that gives similar results even if you switch instruments. This is not a favourable situation however. Cryptocurrencies do not function similar to forex trading nor similar to stocks.

So if you really want to meet your goals in trading you should know which type of robustness would be relevant in your system. There might be different market scenarios where each of these robustness types might be useful. Understanding the relationship helps you become a better trader.