• : December 29, 2020
  • : B. Krishnakumar

User-Defined Scanners and P&F Backtesting

Am sure almost every TradePoint user would have created a custom scanner or the user-defined scanner in TradePoint software. Every user of TradePoint is unique in terms of their risk appetite and trading style. This is precisely why we sense the need to create custom scanners. Hope you guys are with me on the same page until now.

After creating a custom scanner, would it not be logical to test the efficacy of that scanner you created? What I mean is, would it not be prudent to check how the stocks that your scanner throws up performs? Will it not be logical to see the performance or returns the stock generates if you indeed end up taking the trade based on the scanner output candidates?

If you think what I mentioned above is logical, then you will really appreciate the P&F Backtesting feature in TradePoint. This feature has been created precisely for this purpose. Once you create a custom or user-defined scanner, you can go to the P&F Backtesting feature in the “Backtesting” menu in TradePoint.

Suppose you have designed a scanner to identify bullish candidates, you can choose that scanner for “Long Entry” and probably choose a simple double-bottom sell as your “Long Exit” criteria. Choose the box-size and click on the “Scan” button. You can run this backtestfor a specific stock or a group.

Here is the screenshot of a scanner I created with 4-column triangle breakout and XO zone in green as the criteria for long candidates. The exit was a simple Double bottom sell.

Four things

The scan result will throw up the performance of the scanner that you created. You can choose to run this backteston a group of stocks say Nifty 500 or F&O stocks or any other group and the result will show the details of entry, exit, profit, risk-reward and other relevant metric for all the stocks from the chosen group.

In the above screenshot, I chose the “F&O stocks” as the group to run the backtest.

The output from this backtest will give you the confidence and conviction to trust your scanner and pull the trigger when a fresh signal is generated in a stock using this scanner. Try your hand at it, if you haven’t already. This is one of the interesting features in TradePoint.