Equity curve
The equity curve plots the evolution of a strategy's capital trade after trade, and its shape often says more than any aggregate metric.
The equity curve is the chart of an account's or strategy's capital over time: every closed trade (and, depending on the representation, every unrealised change) moves the curve up or down. It is the X-ray of a backtest: where aggregate metrics summarise, the curve shows when the gains arrived, how the losses clustered and how long the strategy stayed below its highs.
Reading the curve's shape
- Steady slope with short, shallow dips: stable strategy, controlled risk.
- Long plateaus below the highs: hard periods to sit through, even if the final result is positive.
- Performance concentrated in a handful of trades: fragile result, dependent on rare events.
In Screener.Trading, a screener's backtest plots the strategy's equity curve over the tested period: it is the natural visual companion to the win rate, profit factor and maximum drawdown, and often the quickest way to spot a strategy that owes its performance to a single market phase.
Keep exploring
- FeatureThe backtesting tool built into your screenersBacktests built from your screeners: entries, exits, fees and full metrics to judge a strategy on numbers instead of gut feeling.
- FeaturePaper trading: learn in real conditions, without the riskPlace orders, manage positions and track your P&L on fully virtual accounts : real trading practice with zero real money at stake.
- GlossaryMaximum drawdownThe maximum drawdown is the largest decline suffered by the equity curve from a peak to the subsequent trough, expressed as a percentage of capital.
- GlossaryPnL (profit and loss)PnL (profit and loss) is the financial result of a position or portfolio, split into realised PnL on closed positions and unrealised PnL on open ones.
- GlossaryWin rateThe win rate is the percentage of winning trades out of all trades of a strategy, to be interpreted together with the average win / average loss ratio.
- GuideBacktesting a trading strategy, step by stepBefore risking a cent, replay your strategy on historical data: backtest setup, reading the key metrics, and the traps of over-optimization.