...(essentially FSB generator) comes with a number of biases, which result in non-fit strategies. The task is to use statistical evaluation methods to determine whether the strats have genuine predictive ability or the results are random (pure luck in in-sample, catastrophic in out-of-sample or live trading).
Footon, what do you mean by FSB "non-fit strategies", do you mean not genuine predictive ability?
If that's what you mean, I agree with you and that's the reason from the very start, I don't use generator and optimizer for my strategies at all. However recently, I want to see whether I can Generate good strategies by the selection of certain indicators that are less "ambiguous", that would reduce the element of "unpredictive" strategies.
I think the problem of having unpredictive strategies in Generator can minimized if we add in some simple "predictive" rules as I've mentioned before such as
Rule 1) faster period input must be smaller than longer period input of the same indicator or measurement i.e. MA with MA for long/buy position vice versa for short/sell position. This rule is for options such as
a) rising, higher than, cross over, change direction, convergence
Rule 2) Rule 1 need not necessary apply if use as divergence (because 2 negative makes 1 positive)
but we should rule out such redundant step.
Rule 1 can be apply to indicators such as MA, Oscillators, and any others using the same instrument/measurement for faster and longer time period.
As I've told Footon, my theoretical framework is actually very simple. If I were to tell you guys, you probably going to slap yourself for not seeing it and you would realise it doesn't take a genius to come up with it. Is the lacking of thinking.
I think in the olden days without calculator, people are "fascinated" with numbers. They are curious to see how numbers "behaves" and hence searching for formulas to understand their behavioural patterns....with the invention of devices, we lost this "fascination" and want the machine to think and formulate for us and just give us the results. We lost the art of understanding.
That's why smart device makes us stupid
Actually, if we apply just this simple rule(s) from above, we reduce tons of unnecessary and unpredictive strategies from Generator and wrongful "Optimization".
Of course there are others rules to add but I strongly believe, if Popov were to add this simple rules above, Generator can develop better and predictive strategies. I've been using Generator recently, with this simple rules apply, I strongly believe Generator is capable of churning out profitable Ea.
One of the ways to improve Generator results is to add in these rules yourself. How? I input my own rules as opening conditions and lock these opening conditions.
In order to focus on developing predictive strategies, we work on the opening conditions only. Therefore, set Reverse as the next opposite direction signal. The rational is to reduce "unpredictive" strategies. Because predictive strategies can work in both ways better than unpredictive ones. And Trailing Stop Limit as your only closing and lock that too. Then in the Generator Common setting, choose the maximum number of opening conditions to use. Count the ones you have added in your opening conditions and add in how many more opening conditions you would want Generator to add. Bear in mind, the Generator may not necessary use all the maximum number so it's ok to put in more than less.
Next, select indicators that uses Trend, CCI, Price Volume etc so narrow your search only for certain types of strategies...in my case, I aim for Breakout, I don't like to use Reversal from support and resistance though because you are betting on a reversal and you would be caught big if a trend break out of the resistance.
Hence, when I add in my own opening conditions to serve as a guide to the Generator, hoping to narrow or direct the Generator towards certain predictive direction, I have rather good results, the generated EA are more predictive and profitable in my demo test.