Reading a result

The short card

A new account's result opens on a short card. From the top:

• You asked: your own words, so you can check what was tested.
• The rule in one sentence, as the engine ran it.
• The verdict: whether the rule beat simply holding over the same days.
• The money: what the starting amount grew or shrank to, for the rule and for simply holding, with the dates.
• The worst fall for both: the biggest drop from a high point to the low that followed it.
• A caution when there were few trades, because then one decision can swing the result.
• The dates the test covers, and a reminder that it describes the past.

Reading your result goes down a stored result line by line.

Simply holding

Every result is set beside simply holding, so you can see whether the rule did better than doing nothing:

• For US shares and funds: the same shares, bought on the first day in equal parts and kept to the last.
• For London shares: FTSE 100 (ISF.L, iShares Core FTSE 100), held the same way. For European shares: Euro Stoxx 50 (EXW1.DE, iShares Core EURO STOXX 50). For Swiss shares: SMI (CSSMI.SW, iShares SMI).
• Either way the same costs and dividends apply over the same days. The result names what it was compared with, and the composer lets you choose another comparison.

A rule that trails holding did worse than doing nothing, over those dates.

The full report

Behind the card, the full report has every figure, the trades, the costs paid, the curve, and how each figure was worked out. Each figure links to its own page in the Education Centre.

Words you will meet

CAGR

The steady yearly growth rate that would have turned the starting amount into the final amount. A worked example, and what it does not tell you.

Max drawdown

The biggest drop from a high point to the low that followed, as a percentage. A worked example, and what it does not tell you.

Sharpe ratio

The growth above what cash paid, divided by how bumpy the ride was. A worked example, and what it does not tell you.

Hit rate

The percentage of days in the market, or of finished trades, that made money. A worked example, and what it does not tell you.

Turnover

How much of what was held got swapped for something else each year. A worked example, and what it does not tell you.

What a result cannot tell you

• What happens next. A test replays one stretch of the past.
• Whether the rule was luck. That is what Prove it and the sealed test look at.
• What your own broker would have charged, unless you chose that broker in the composer.
• Only shares and funds that trade today are in the data. A company that failed, was taken over or was delisted is not in it. So a test that picks from a list of shares is flattered, by an amount the test cannot measure.