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Definition

A methodology by which a system is developed with rules tailored to fit the data in question precisely. A computer program can test every moving average from 1-day to 200-day, buying and selling at every signal and then applying the correct dealing costs. Once this is done it will establish which moving average gave the most profitable result (or the least unprofitable result) over a given period of time. This will be the optimum moving average for that share over the time period tested. Of course, past performance is no guarantee of future performance - but it is a consideration.

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