Review the Strategy's Performance
TradeStation provides three different ways to review the strategy's performance; you can use the onscreen cues, the Strategy Performance Report, and the Strategy Equity Indicator.
Onscreen Cues
As you apply the strategy to your data, TradeStation automatically analyzes every bar of data in your chart and graphically displays all the buys and sells you would have made based on your idea. See About Strategy's Onscreen Cues for details.
By examining the chart, you can instantly see if the strategy missed any major trades or took any bad trades. This visual inspection gives you a good 'first glance' idea whether or not the strategy is performing correctly.
Using the Strategy Performance Report
The Strategy Performance Report provides detailed information on the performance of the strategy. It shows the profit that would have been generated by the strategy's trades as well as other factors such as Drawdown, return on account, largest winning trade, and more. The Strategy Performance Report also breaks the trades down by long and short trades (when used). For more information on the Strategy Performance Report, see About the Strategy Performance Report.
If you like the strategy but have concerns about some of the figures in the Strategy Performance Report, you can add or remove strategies from the Chart Analysis window or edit the strategies inputs. You might decide that the overall idea is good, but the integration of the entries and exits within the strategy needs more work. Or, you could rewrite the strategy from scratch; you could also put the idea away for consideration at another time.
If you find the strategy is not worth trading, you have lost nothing. You tested the strategy on real data and real market conditions without risking a dime. Sometimes successful strategy ideas may be discovered while analyzing the results of a failed strategy idea. Therefore, when you have a strategy whose results are disappointing, you should analyze why the strategy didn't work.
Using the Strategy Equity Indicator
The Strategy Equity Indicator shows at a glance whether or not your strategy provides consistent, reliable results. The Strategy Equity Indicator will graphically display how equity has built up over the trading period, whether in a consistent or sporadic manner. It can help you answer the question, "Can I live with the behavior of this strategy?".
In addition to their use in the process of testing, once you do begin trading your strategy, the onscreen arrows and flags along with the Strategy Performance Report and Strategy Equity Indicator are invaluable when monitoring the results of your trades.