3) Running Your Strategy

New Training Video! 

Click Here to see a training video of this step!

In the previous step, you learned how to create a Strategy.  In this step, you'll learn how to run it.  Running a Strategy means performing a test against historical data, and producing results that can be viewed and analyzed to examine the quality of the Strategy.  In short, many analysts call this a back test.

In addition to simply running the Strategy, you'll also learn about revising the Evaluation Period, settings such as the starting equity, spread and commissions, and you'll also learn how the Processor controls what's being run in StrataSearch.

Adjusting the Trade Settings

Running the Strategy

Using the Processor

Adjusting the Trade Settings

Before running your first back test in StrataSearch, you may want to view and adjust the Trade Settings.  In short, these settings allow you to customize the search according to your specific requirements.  To view the Trade Settings, open the Setups > Trade Settings menu:

After importing prices and sectors in Step 1, the Available Dates will be different than what's displayed above.  For the back test, however, you should set the Start Date and End Date to the evaluation period of your choice.  For this test, a 5-year period ending at the last available date is a good starting point.

There are many other adjustments that one can make in the Trade Settings, but for now we'll move to the Trade Amounts tab:

On the Trade Amounts tab, you can customize your back test with a variety of settings such as Beginning Equity, Interest Rates, Adjustments, and Commissions.  You can also specify whether or not to make trades on margin.  At this point, we'll also assume you're trading stocks in this first Strategy, but you can also customize your settings for Mutual Funds, Futures and Forex.

While the settings mentioned thus far are all that are needed to run your first back test, you can briefly look at the other tabs on the Trade Settings to see what they offer.  Click the Help button on the Trade Settings window for extended help on these settings.  Every screen in StrataSearch has a similar Help button, and it's always a good place to look for detailed information.

When you've finished adjusting the Trade Settings, click OK to save your changes.  You're now ready to run your Strategy.

Running the Strategy

Running a Strategy in StrataSearch can be done by opening the Run > Run Combinations menu:

You'll first need to select Strategy as the Run Type.  After doing this, you'll be able to use the dropdown selection to locate the Strategy you created in Step 2.  If you used the same name in the example, this will be My First Strategy.

After you've selected the Strategy you wish to run, you'll also need to identify the Sector you'd like to run the Strategy against.  At this point in the learning process, it's recommended you choose a relatively small sector.  You can certainly run against the Russell 2000 Component Stocks, but you'll then need to wait longer for it to complete before examining your results.

After you've selected both your Strategy and Sector, click the Start button to submit the back test to the Processor.

Using the Processor

After submitting your back test, you should see the Processor window open automatically.  If not, use the Display > Processor menu:

The first thing you should notice in the Entry and Exit Strings is that the variables you set up as parameters when creating your Strategy are replaced by actual numbers.  StrataSearch is running each and every possible combination of variables as you defined them, and the Processor will not stop until each combination has been run and entered in the results database.

The Processor has a number of options that allow you to control what it's doing.  For example, you can click the Pause/Resume button to temporarily pause and resume processing:

By clicking the Hold button just to the right of the Pause/Resume button, you can also save the search in the Processor Queue.  From a processing perspective, this is no different than terminating and restarting the back test from the Run > Run Combinations menu;  however, having it ready to Release from the queue can be helpful in some cases:

To quickly see the status of the Processor, even when the Processor window is closed, you can evaluate the light that displays to the right of the buttons on the StrataSearch toolbar:

Solid Green:

The Processor is idle

Flashing Green:

The Processor is busy

Solid Red:

The Processor is paused

As mentioned, the Processor will keep running until every combination of variables has been tested and added to the results database.  Depending on the number of variables in your Strategy, this could take a considerable amount of time and require significant disk space.  For example, one could create a strategy with 10 or more variables, ultimately leading to millions of possible parameter combinations.

To limit the number of combinations that enter the database, StrataSearch offers a filtering mechanism.  Open the Setups > Trade Settings menu again, but this time navigate to the Combination Filters tab:

In the above example, the Enable Filtering of Combination Results box has been checked, and a requirement has been added to only save results that have an Annual Percentage Rate greater than 5%. 

By adding the above setting, you can keep your database clean from the poor results that you probably wouldn't wish to examine anyway.  When running a Strategy that has an extremely large number of variables (our example strategy is just fine), it is best to add a filter similar to the above to keep your database clean and small.  However, when filters are set, the Processor may not know when every combination has been tested.

StrataSearch uses the results database to identify which parameter combinations have been tested.  But if some results do not pass the filters and are never added to the database, StrataSearch has no way of knowing whether or not they have already been run.  Because of this, the Processor may keep trying those parameter combinations endlessly.  In the next step, you'll learn how to examine your back test results, and being familiar with the results will help you identify when it's time to manually Terminate a back test in such cases.

StrataSearch saves all results regardless of whether you Pause and Resume a back test, Hold and Release a back test, or even Terminate and resubmit a back test.  Thus, you can always stop the back test, and even close and reopen StrataSearch, and the back test will restart exactly where it left off.

If you're still running your example Strategy, you can let it run until the Processor becomes idle.  Or you can move onto the next step even as the back test continues.  We've begun talking a lot about results, so let's move on to the next step and examine them.

New Training Video! 

Click Here to see a training video of this step!

Next StepExamining the Results

See AlsoTrade Settings, Run Combinations, Processor