What you can find here:
- Create stock screens with the wizard;
- Backtest screening rules;
- Integrating Ranking Systems in the Screening and Backtesting process;
- Free form rules.
Before proceeding with this article, please open the New Screen interface from the top menu. Click Research -> Screens. On the resulting page, click New on the grey bar toward the top and select Stock.
Creating a screen
The New Screen interface is divided into five tabs, containing all that is needed to create and test screens. For the purpose of this tutorial, we will set up a growth stock screen by starting from the Rules tab.
Click on the “Add Wizard Rule" button. The platform will take you to an easy-to-use, menu-driven interface with clear descriptions that will let you create powerful screens in a matter of minutes. More flexibility can be achieved with free form, but even just using wizard rules will give you a stronger, more flexible screen than available with free or low-cost web screeners.
We start from a value indicator: the PEG Ratio.
This interface provides you with a quick snapshot of the factor, how to deploy it, and a short description.
Every wizard rule is associated with a default setting. In this case, it is PEG lower than 1. The rule can be fully customized depending on what you are looking for by changing the parameter and the operator.
For the PEG Ratio the following operators are available:
- Less Than
- Less Than Industry Median
- Best In Industry
- Best In Sector
- Best In Market
Depending on the operator, the related parameter will change.
The default setting in this example searches for stocks with PEG ratios that are in the lowest 20% of their industries.
After adding the selected Wizard Rule, you will find it under the Rules tab.
The Rules tab contain many suggested criteria, both from the Wizard and in free form. In our example, the screen focuses on reasonably priced stocks exhibiting stable growth.
On the Settings tab you can choose how many the stocks are selected, from what stock universe, what benchmark to display in a backtest, and what method to use in a backtest -- long, short, hedged or long/short.
The default universe, All Fundamentals - USA, includes all the stocks available for trading on the US market. In this example, we will exclude the potentially illiquid over-the-counter stocks.
To identify the list of stocks that we are interested in, the Settings and Rules tabs are sufficient. The Run button will start a search for stocks that satisfy the requirements.