To finish the piece for a mechanical system

Principle 3. To describe the behavior of the market, starting from a certain level, it is sufficient to use empirical methods, techniques and criteria used in the simulation of simple systems, ie methods of the experiment, error theory, the theory of regression analysis and statistical evaluation.

Principle 4. Prerequisites mathematical methods must not contradict the nature of the object, which is used to study these methods. Prerequisites mathematical method called conditions (restrictions, requirements), in which obtained the method (for example, using the method of least squares requires that discrete independent variables was significantly greater than the error of measurement). By the nature of the object in this case refers to a set of properties of the empirical data, which reflect the behavior of the object in space and time. The simplest properties of empirical data is, for example, the correlation between them is time. Conditions of application of the methods, especially statistical, not usually obvious, and in many cases, for their determination requires special studies. The correct application of known mathematical methods for the analysis of economic processes is a problem. In the 70 years of the last century, this question is very intensively developed in econometrics, published a large number of works. Analysis of the problem led to the unanimous conclusion that the greater the discrepancy between the premises of mathematical methods and properties of the study, the less likely that the method in this problem can lead to a positive result.

It is easy to see that the principles set out fully fit into the methodology of systematic approach. The systems approach is not a machine or by constructing models - a methodology of scientific research, which can be applied to any object in any situation. [2]

Fundamental provisions of the systems approach has long been developed and well presented in the literature [2]. Our method should only be considered as a further development of a systematic approach. The essence of development is that the analysis of the securities market, we applied some of the principles of systems analysis processes in the natural sciences.

Why is system analysis used effectively?

The above principles are necessary and sufficient for the construction of a mechanical trading system. Especially important is the fourth principle. Despite the fact that he is well known for informed readers, in practice, is usually ignored.

Give some specific examples.

Example 1. It is known that the empirical values that show the process any time frame, are not completely accurate. Any empirical characterization is always measured (defined) with some error. Moreover, the general availability of the process can only speak in the event that changes a given time frame exceeds the measurement error of these oscillations. In other words, you can not proceed to the analysis as long as the estimate of the variable error. Unfortunately, examples of this attitude to data to solve problems we have not seen a trader.