Discover how Pluto.fi's QuickTest grades interpret your trading strategy's performance. Understand the grading from A-F and improve your trading decisions.
On Pluto.fi, running a QuickTest on your trading strategy gives you an immediate and detailed snapshot of how well it would have performed during the selected test period. One of the key outputs of this QuickTest is a grade ranging from A to F, similar to the grading system used in schools. This guide will help you understand what these grades mean and how to use them effectively.
How is the QuickTest Grade Calculated?
The QuickTest grade is computed based on a variety of performance metrics, such as drawdown, profit and loss, Sharpe ratio, average trade, winrate, outlier days, benchmark comparison, and cash utilization. The importance of each metric depends on the strategy type: general, trend following, mean reversion, investing, or scalping. The final grade is a weighted sum of the individual metric grades, providing an overall performance measure of your strategy.
What Does Each Grade Mean?
Here's a general idea of what each grade implies:
A: Exceptional performance. The strategy has outperformed in all or most metrics.
B: Good performance. The strategy shows strength in several metrics, though there may be some areas for improvement.
C: Average performance. The strategy has a balanced performance with notable areas for improvement.
D: Below average performance. The strategy may have underperformed in several metrics.
F: Poor performance. The strategy has underperformed in most or all metrics.
How to Use QuickTest Grades?
Remember, QuickTest grades are not predictors of future success but indicators of past performance based on historical data. They can be instrumental in fine-tuning your strategy, identifying its strengths and weaknesses, and gaining insights for improvement.
However, they should not be the sole determinant of your investment decisions. Use them in conjunction with other tools, your own market research, and risk assessment.
And don't be disheartened if you receive a lower grade! Trading strategy is a game of constant learning and adaptation. Use the insights from your QuickTest grade to tweak your strategy, run another QuickTest, and continue learning and improving.
You're now ready to interpret and utilize the QuickTest grades on Pluto.fi to enhance your trading strategy. Happy trading!