In this post, I am going to describe how to use Faster Bull to build a profitable trading strategy.
When building a strategy, I typically first load the Faster Bull Interactive Chart to see if I can visually spot any interesting patterns. Looking at the chart of EWZ below, the ETF had been in a significant down trend, followed by price consolidation ending with a big up day. Continuing with my investigation, I click on the point of interest.
Clicking on the chart loads a new screen which contains conditions and all of the elements needed to build and backtest a strategy. From there I can select which tickers to include in the backtest, the backtest date range, conditions to backtest and include the exit criteria. An important feature to note here is that I can select conditions from multiple time frames. This allows us to analyze multiple time frames in a single strategy!
The second half of the modal window includes the exit criteria configuration section for the strategy. We can either analyze a range of different holding periods or simulate a stop and/or limit order in addition to a maximum holding period. The “One trade per Ticker at a Time” check box tells Faster Bull to not allow trades of the same ticker to overlap, creating a more real world simulation. Once all of the parameters are set, we can click the “Backtest Strategy” button.
The summary results of the backtested strategy are shown within the same modal window. The benefit of this is we are able to toggle back to the strategy builder view we were just on, without having to reconfigure the strategy parameters or reload the chart. Alternatively, we can click the “Expand the Data” button to see a more detailed analysis.
After clicking the “Expand the Data” button, we are redirected to the Backtest Results page where we can see the strategy parameters used for the backtest, detailed backtest results and the trades included in the backtest. Also included are stop and limit values which could be used to place actual orders through your broker. Any trades that have not been closed will be marked as Open. From this page, we can either return to the Interactive Chart of click the “Revise/Save Strategy” button which will take us to the Strategy Builder page.
Once on the Strategy Builder page, we can remove or add conditions from our strategy, change other parameters for our strategy, load predefined strategies or save our current strategy (saving strategies requires a free membership).
Still on the Strategy Builder page, Faster Bull knows that this particular strategy originated from the chart, so by default, conditions are shown that are true for the click date used to build the strategy. Note that Daily, Weekly and Monthly conditions are available to add to the strategy. Click the “Show All Conditions” button to see all of the conditions available for use.
Stay tuned for more features coming to Faster Bull in the near future which include:
- a scan page to find signals for your saved and predefined strategies
- ability to compare backtest results against a selected benchmark ticker
- ability to create and backtest a relative strength rotation strategy
- ability to create a portfolio of strategies which can be backtested together