of how your system needs to evolve due to changing economic conditions and realities.
Hence, we start again at Stage 1 with a new system or to slowly modify an existing one.
Results from SPC can be fed back into a redesign and redevelopment process for con-
tinuous improvement. In a K|V world for trading/investment systems, risk is process con-
trol. Risk management is really a quality control problem and investors benefit from bet-
ter, higher quality, longer lasting, and more capable systems as lower cost.
Continuous improvement is fundamental to success in the global financial markets.
Companies that are just maintaining the status quo in such key areas as quality, new trading
system development, the adoption of new technologies, and process performance are like a
runner standing still in a race. Competing in the global financial marketplace is like compet-
ing in the Olympics. Last year ’ s performance records are sure to be broken down this year. If
a firm is not continually improving its trading/investment systems, it will not stay in the top
quartile very long. Investor demands are not static. They change continually. A special strat-
egy today that is innovative will be run of the mill tomorrow. The only way a money man-
agement firm can hope to compete in the modern capital markets is to improve constantly.
In Chapter 1, we presented a list of seven deadly diseases for trading/investment sys-
tem design and development. Using the topics discussed in the ensuing chapters, we pre-
sented methods to prevent the occurrence of these diseases. Additionally, the goal of our
methodology is Quality Money Management.
● Build trading/investment systems that deliver better performance to investors.By following a rigorous process of discovery, evaluation, and development, financial
firms can deliver better quality trading/investment systems.
● Shorten the trading/investment system design and development cycle, the time
it takes to turn a trading idea into a finished, working system.By following a rigorous process, financial firms can more quickly develop new systems.
● Formalize the process and increase the speed with which new trading ideas are
evaluated and either discarded or promoted, called “ strategy cycling. ”By following system documentation and portfolio evaluation processes, firms can use
standardized processes for considering many systems under development.
● Formalize the process and increase the speed of recognizing and shutting down
trading/investment systems that no longer have a competitive advantage.Using statistical process control, firms can recognize more quickly when a running sys-
tem is no longer performing to specification.
● Reduce the total cost of trading/investment system design and development.A repeatable development process will reduce the amount of seed capital necessary to
move new trading systems from idea to implementation.
● Provide seed capital investors with a real options model for capital burn rates
and stepped commitment of capital.30.5. I N CONCLUSION 275