Q: I have become one of the largest option market makers in the little country I moved to. It’s a wonderful feeling being able to take my skills with me where ever I go. And making money is an added bonus!

In testing various systems, the performance is always good on some stocks/commodities and not so good on others. I have always wondered do I just average the results? Do I hope my actual trading turns out more like the “good ones” and less like the “bad ones”? Or do you know of a more objective way to analyze the results of a system that trades multiple stocks and/or commodities?

A: You need to understand your system very well so that you totally know how it works. Once you know how it works, then you can select the markets (or stocks) to fit the qualities that make it work. If you get hugely different expectancies on different stocks, then I suspect that it is due to your system working well on some and not on others. But if you understand how your system works, then you should be able to preselect the stock that it will work on.

In addition, you also have to remember that your system expectancy will be different for different market types. If the market type changes to something in which your system doesn’t work well, then you need to select a system that does work well in that market type. And market types could also be the reason for different expectancies. If the market type is actually changing when you switch to a different stock, you’ll get different results.

Note: I apologize for the recent dry spell in blog posts and endeavor to post more often in the future.