This Panel is located at the Rules Area of the “Backtest Strategy” page.

It contains the Rules used for ranking your instruments. So, once instruments in the strategy's Portfolios pass the Buy Filters, they will be ranked top to bottom (or vice versa) based on these Ranking Rules. The top X instruments are then entered as Positions.

This “top X” is defined by the strategy's “Total Positions to Hold” (at the “System Settings” Panel). So a strategy that holds 10 Positions at any given time will look at the top 10 ranked instruments.

This panel is collapsed by default; to expand its contents, simply click the arrow button as shown above. When it's collapsed, you'll see the number of rules added to this panel (e.g. ).

Note: If you use a restricted license, this panel may not be visible to you. So you can't customize how the instruments are ranked and picked. If you wish to upgrade your license, please contact our Customer Support at support@portfolioboss.com.

1.  To add the ranking-rules, simply click the “Add Ranking” button.

2.  The “Add Ranking” dialog then shows up, where you can search, select, and add the Ranking Rules. Make sure that you actually ticked (enabled the checkbox) of the Ranking Rules before pressing the “OK” button.

If you're merely adding one rule, you can double-click that rule without pressing the OK button (provided the rule's not yet checked).

3.  Once a rule is listed, you get the gist of how it operates by reading its parameters. And if you hover your mouse on the rule, a descriptive tooltip shows up. 

Note that newly added rules are placed at the bottom of the list. If you want to dive deep into each Ranking Rule, please refer to Chapter 7 where we discuss the Technical Indicator(s) used, the real-life application of each rule, and their parameters. 

4.  You can add the same Ranking Rule more than once in the strategy (preferably each rule has its own distinct settings from the other). 

Simply open the “Add Ranking” dialog again and choose the same rule you have added previously.

5.  To delete a rule, click the trash bin button next to it.

6.  Each listed Rule has “Offset” and “Weight” parameters. “Offset” will shift the period-span of that rule a certain distance to the past.

For example, the rule says “Rank according to… Highest volatility in 5 days”, which means the instruments are ranked from the one with the highest volatility to the lowest, during the past 5 days from today. Thus, giving it an offset of 5 days will shift the current date to 5 days ago, i.e. the time range for this Ranking Rule starts from 10 days ago until 5 days ago, instead of 5 days ago from today. That will be the time range where instruments' volatility is calculated.

Most of the time though, you don't need an “Offset” value (i.e. 0 days). This parameter is there to satisfy some esoteric theories on trading.

Now, the “Weight” parameter allows you to put more (or less) importance to each rule. That is, if you have but one rule, its “Weight” will be 100% as it is the only rule being used. But if you have multiple rules, you can define their relative importance by defining each of their “Weight”. 

For example, you have two Ranking Rules: one looks for the lowest-volatility instruments, with a “Weight” of 70%. Another looks for the highest-return instruments, with the “Weight” set to 30%. That means, instruments are ranked more on their lower volatility than their higher return, thus instruments that have the highest return but higher volatility may not rank highly. But obviously the two rules are still working in tandem with each other.

The numbers you put there can be anything, and don't necessarily add up to 100%. Behind the screen though, they're automatically calculated so they add up to 100%, and you can see the actual weight for each rule inside the parentheses. If you simply add rules without changing their weights, they'll have equal weights, thus equal importance to each other.

7.  You may use the checkbox on each rule to disable/enable it.  An unchecked rule means it's not used by the strategy.

You can do this to experiment how the strategy runs with or without the rule, while keeping its parameter settings (instead of deleting the rule and adding it again).

Notes:

• You can show or hide the Rules' header (name) with this button:

• It's possible for a strategy to not have a single Buy and Sell Filter; but a Ranking Rule is always necessary. If such is the case, the strategy will only buy based on the Ranking Rule (after all your instruments have been ranked), and then it will only sell instruments during switch-day. This is only possible for a Periodically Switching Strategy, as it has a switch-day; if you're using Continuously Switching Strategy, at least one Sell Filter is also needed, otherwise PB will throw a warning at the “System” parameter when you choose the option “Continuously Switch Position” there.

• Exception to the above is when your strategy contains but one instrument (as its Portfolio); then it won't need a single ranking rule. If it originally contained numerous instruments, and then you leave just one on the Portfolio, whatever Ranking Rules you have here will not be shown. You can't even add Ranking Rules to it.

     The moment you add more instruments, those Ranking Rules will be shown and used again.

• Keep in mind, your various Ranking Rules must be able to cope with a long backtest range, in various market conditions. Otherwise your strategy is too fine-tuned to perform well at a specific, short-term period.

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