Backtesting from Pattern finder | RZone
It has happened many times in the past with us that we see a stock and observe the price patterns that the stock has triggered and we quickly want to back-test them.
For example, a pattern like Hammer or Bullish engulfing in candlestick chart or something like super pattern or triple top buy in P&F chart and we want to quickly see the past performance of the pattern for that stock. It would be very handy if we can do it immediately.
At times, the user may not even be very sure about the pattern. Pattern finder and backtest feature in the RZone addresses this issue.
Where to Find?
Smart Scanner -> Pattern Finder
Select the chart type, the stock group and click on the scan.
The table will show you the price patterns those are qualified in the stock. We have kept selected patterns for each charting type. If none of them is qualifying, it will show that message in the table.
Now, you can see the patterns those are qualified. Click on the backtest button.
Below dialogue box will appear.
Select the pattern. The stop-loss in percentage and profit target.
For example, stop-loss of 1% and target of 5%.
You can also select risk-reward for exit. If you put 2 as risk-reward, the data will be back-tested for 1:2 exit. That means, if your initial risk was 1 rupee, it will consider target of 2 rupees.
The initial risk is calculated based on the failure level of the pattern.
Select period and click on the backtest.
Result will appear something like this.
Number of trades in the selected period.
Success ratio is percentage of profitable trades.
Risk reward ration shows the ratio of average profit compared to average loss in the trades.
Average return per trade is shown in percentage.
Expectancy is a important formula that shows the relationship between success ratio and the risk-reward ration. Expectancy above 0 shows that system has better profitability. Expectancy below 0 shows that system has low profitability ratio.
Please note that the slippages and other impact cost is not considered in this calculation.
This feature is applicable in all the charting methods such as P&F, Renko, Line-break, Heikin-ashi and Kagi charts. This makes it a unique platform and very interesting platform for the user to identify the pattern and backtest.
Pls let us know which patterns you would want us to add in the pattern finder scanner.