He noted that timing systems tend to work well in either trending markets or trading ranges but not both. By 1982, having published two influential books, Barnes cemented his reputation as a leading authority on trading systems. Barnes' latest effort, Trading System Analysis , falls short of his earlier fine work. While flashes of insight recall his past contributions, here an accomplished master never quite reaches his stride.
Barnes stakes out a bold thesis.
He claims that all trading systems that work off past price data are fundamentally flawed. The reason is that the fund of available price history is too limited to comprise an adequate data sample. What's more, some markets have been governed since their inceptions by a single dominant trend, one that may not be representative of the future. Faced with these constraints, Barnes urges the use of simulated data for testing. Computer- generated data offer a far richer spectrum of scenarios.