CwH Strategy Test

















  
Strategy Parameters
Hover your mouse over each parameter description for help on that parameter.
Start Date
End Date
Max. Hold Days
Transaction Cost $
BoP Stop Loss %
Trailing Stop Loss %
Target Gain %
Buy Rule
Buy Price
Sell at Open if Unconfirmed
Minimum BoP
Maximum BoP
Slippage Allowance
Minimum Volume
Min. Vol. to Adv Ratio  e.g. 1.5
Confirmation Vol. Ratio
Buy Limit as % of BoP
Buy Stop as % of BoP
No. of Positions
Minimum RS Rank for Buy
Minimum CEF2 for Buy
Minimum CEF3 for Buy
Limit to stocks in this top percentile
Use Market Trend
Use TRS
Require Squeeze
Initial Portfolio Value $10,000
Cup-with-Handle Breakout Backtest Tool
How to Use this Tool

This tool allows you to do sensitivity analysis on cup-with-handle breakouts. By adjusting the parameters on the left, you can test how stocks with those parameters would have performed after breakout. For an explanation of each parameter, hover your mouse over the parameter name.

The tool uses our extensive database of all stocks that we identified as being in a cup-with-handle pattern back to 2004. The tool ignores our definition of a confirmed breakout (must meet or exceed the breakout price AND have a volume of at least 1.5 times average daily volume) and allows you to set your own minimum volume and volume level relative to adv for a confirmed breakout (you can't change the breakout price which is determined by our chart pattern methodology).

A breakout from a cup-with-handle watchlist does not guarantee that the stock in question will go on to make significant profits. There is a wide range of possible outcomes and the best we can do is weight the odds in our favor that a particular breakout will make significant gains. We do so by looking for the most promising stocks as they breakout and then by limiting our losses after taking a position. We have found through our research that the most promising stocks have high RS Rank values, have positive earnings in the last two quarters (CEF2) and have had accelerating earnings over the last four quarters (CEF3).

Running the backtest over a long period of time can take a few minutes so we recommend that you first familiarize yourself with the tool by running over a short time frame - 12 months at the most. We also recommend that you become familiar with the content of the links shown below.

As you run the tool, you will at first be surprised that taking a single position can provide the best returns. This is because more of your portfolio is invested for more of the time.

References:

Cup-with-Handle Methodology

Backtest Methodology