Guide - analysis
We provide detailed analysis on each trading strategy applied on a stock or instrument. These detailed analysis provide you the necessary insights and objective view to help you make informed trading decisions.
The first part of the detailed analysis shows:
- The name of the stock or instrument (Caterpillar Inc.).
- The name of the trading strategy (Super Trend).
- The period for this backtest (1 year).
- A short description of the trading strategy. Click on this description to get more details of this strategy.
This is followed by a graph which contains:
- The daily closing price of the stock or instrument for the backtest period (blue line).
- The trading volume (green and red lines at the bottom).
- The buy and sell signals generated by the strategy.
- A green up-arrow is a buy signal.
- A red down-arrow is a sell signal.
- A green circle is an exit from a long (buy) position.
- A red circle is an exit from a short (sell) position.
- For trading strategies that has indicators (eg. Bollinger Bands), it is shown as a red line alongside the price.
For trading strategies that has indicators that cannot be plotted alongside the price (eg. RSI or MACD), it is plotted in between the price and volume graphs (in red).
The cumulative return graph shows:
- Green line – The cumulative return of the trading strategy on this stock over the backtest period. It starts off with 1.00 at the beginning of the backtest.
- Grey line – The cumulative return of a Buy and Hold strategy for the same backtest period. This acts as a benchmark for you to compare the returns of the trading strategy against.
The Top 5 Drawdowns graph shows the drawdowns. The blue line is the cumulative returns. The shaded areas shows the trades with the largest drawdowns. Different trades are represented by different colours. The start of the shaded area is the entry point of the trade, and the end of the shaded area is the exit point of the trade.
The Sharpe Ratio is used to measure the returns of a trading strategy compared to it’s risk. The orange line shows the Sharpe Ratio calculated daily, over the backtest period (1 year). To calculate the daily Sharpe Ratio, a timeframe of 1 year and a risk-free rate of 1% are used.
The blue dashed line shows the average Sharpe Ratio for the backtest period.
The Historical Performance shows the 1 year cumulative returns of the trading strategy over time. This gives an indication of the profitability and the stability of the trading strategy on this stock/instrument over time.
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