Understanding Results
=====================

After running a backtest, Quantlens shows you a rich set of charts and metrics.
This page explains what each number means — in plain English.

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Equity Curve
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The **equity curve** shows the growth (or decline) of your starting capital over time.

- A **steadily rising** curve = consistently profitable strategy.
- **Flat sections** = no trades / neutral market conditions.
- **Sharp drops** = losing streaks or large individual losses.

.. tip::
   A smooth, gradually rising curve is generally better than a curve that shoots up quickly but has violent swings — it suggests the strategy is robust rather than lucky.

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Key Metrics
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.. list-table::
   :header-rows: 1
   :widths: 35 65

   * - Metric
     - What it means
   * - **Total Return (%)**
     - Percentage gain/loss over the entire test period.
   * - **Annualised Return (%)**
     - What the return would be if scaled to 1 year. Useful for comparing strategies of different lengths.
   * - **Sharpe Ratio**
     - Return per unit of risk. Above ``1.0`` is acceptable; above ``2.0`` is excellent.
   * - **Sortino Ratio**
     - Like Sharpe, but only penalises *downside* volatility. Better for asymmetric strategies.
   * - **Max Drawdown (%)**
     - Largest peak-to-trough decline. A drawdown of ``-20%`` means the portfolio fell 20% from its high before recovering.
   * - **Win Rate (%)**
     - Percentage of trades that were profitable.
   * - **Profit Factor**
     - Total gross profit ÷ total gross loss. Above ``1.5`` is healthy.
   * - **Avg Trade (USD)**
     - Average profit or loss per trade after commissions.
   * - **# Trades**
     - Total number of trades executed during the test period.

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Interpreting Sharpe Ratio
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.. list-table::
   :header-rows: 1
   :widths: 30 70

   * - Sharpe
     - Interpretation
   * - < 0
     - Strategy loses money risk-adjusted — avoid.
   * - 0 – 1
     - Positive but weak. Likely not worth trading live.
   * - 1 – 2
     - Acceptable. May be worth further investigation.
   * - > 2
     - Strong risk-adjusted performance.
   * - > 3
     - Exceptional — double-check for overfitting.

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Interpreting Max Drawdown
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Max Drawdown tells you the **worst losing streak** you would have endured.

For example, if your strategy has a Max Drawdown of **-35%** and you start with $10,000, there would have been a point where your account was worth only **$6,500** — before recovering.

.. warning::
   Most traders underestimate how psychologically difficult it is to hold through a 30–40% drawdown. A strategy with a lower drawdown is often preferable even if its total return is slightly lower.

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PDF Tearsheet
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Click **Export PDF** to download a formatted tearsheet containing:

- Equity curve chart
- Monthly returns heatmap
- Full metrics table
- Trade log summary

This is useful for sharing with investors or for your own records.