(Category: Technical Screeners)
We’ll now explore an interesting example. Why? We’ll get into it later. For now, let’s see what this screen looks for and the conditions used to create this screen.
As we can see this screen aims to filter stocks that witnessed a rapid surge in prices and still have a lot of potential for upside left. A total of 6 different rules were used here.
6. EMA (close, timeperiod=21) > EMA (close, timeperiod=50). Just like above you can set this, too.
Now let’s see how it faired against the benchmark index. (This bit is very interesting.)
With an equal split between the winning trades and losing trades, the screen posts a stellar return of 136% against the benchmark index that posted 13% in 1Y. Crazy, right?
But when you scroll down a little you see something astonishing.
As you can see the screen also shows high volatility (as seen in the green box.) Not just that, the screen also witnessed a huge Drawdown of 47.92% as compared to the 15.84% of the index.
This highlights the importance of proper and deep analysis of a screen and not just making a decision based on the returns. Risk and Reward are very important in any strategy you make and this screen doesn’t seem a good choice for risk-averse individuals, right?
Moving on to the example number 6.