Quality Money Management : Process Engineering and Best Practices for Systematic Trading and Investment

105

Prototype in Modeling Software

CHAPTER ◆ 10

Trading/investment strategy development processes should strive to deliver small, rudi-

mentary component, or unit, prototypes and systems early and often, within the first few

weeks of the start of the project, then continue to deliver systems of increasing function-

ality. Converting mathematical models into prototype models leads to quick decisions

and, furthermore, produces a defect-removal strategy with the greatest efficacy. The goal

of the iterative process is to deliver working prototypes frequently.

Before there is a prototype, the idea exists in abstract form only. It is described in words and leaves scope

for misunderstanding. It is hard for the originator to convey exactly what he or she has in mind, and it is

easy for people to get hold of the wrong end of the stick. Once the prototype exists then people can see

and touch and feel the idea. Comments for improvement will flow thick and fast. Whether the prototype is

a model in cardboard and string or a software application consisting of a few skeleton screens with noth-

ing behind them, it presents a framework for refinement and extension of the idea. 1

This step is where prototype development and testing takes place, that is, development

and testing go hand in hand (although we will discuss additional testing concepts in the

following step). A good rule of thumb is that development and testing should consume

the same amount of time.^2 Prototypes will vary in scope and complexity from a small

3

2

1

Research

quantitative

methods

Prototype

in modeling

software

Design and

document trading

strategy

Check

performance

Describe

trading idea

FIGURE 10-1