Most charting packages allow the trader to optimize systems and indicators. For example, instead of using the same moving average in all markets, our trader could ask the computer to find the combination of moving averages that have worked best in the past for the particular market with which he is working. It can also be done for virtually all technical indicators, like daily and weekly breakout systems. Optimization allows for technical parameters to adapt to changing market conditions.

While some traders sing the praises of optimization, there are others who say it has not helped their trading results. How the data is optimized is the center of the debate. It is felt the correct procedure is to test only part of the price data to choose the best parameters, and then a different portion to test the results.

The choice to optimize is strictly a personal one. If a trader is following only a handful of futures markets, he or she should definitely experiment with optimization. Our stock trader may be a different story. Following thousands of stocks is a definite argument against optimizing. On the other hand, if he or she specializes in a smaller number of stocks, optimizing will work. For generalists who follow a large number of markets, it is suggested they use the same technical parameters for all of their markets.

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.