# ASX Small Caps Performance over the years? Backtesting trading system question



## Frankieplus (12 August 2021)

Hey everyone. 

I'm backtesting a systematic trading system that i want to use to trade the ASX Small Universe.. 
Its a trend following system

If I test this system for all of 1990-2000 ASX Small Caps the results are favourable. 
From 2000 - 2020 the results are favourable up to 2010. 

From 2010 until now (2020) the results are mediocre and probably not worth trading. 

I'm not a veteran in the market and don't have history behind me to know if Small Caps were 'different back then'

So whats going on here? Have Small Caps just not been performing as well from 2010 - 2020 as they were in previous years?
Not as much 'bank for the buck' in the Small Caps index constituents? 

Or does a trading system need to be tweaked over the years to 'fit' the market you are trying to trade?

Also, is there a way I can check the results of the S&P ASX Small index itself over the last 20 years so that I can see the performance of it?


Thanks.. 


-Frank


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## rnr (12 August 2021)

Frankieplus said:


> Hey everyone.
> 
> I'm backtesting a systematic trading system that i want to use to trade the ASX Small Universe..
> Its a trend following system
> ...



Hi @Frankieplus,

The S&P/ASX Small Ords is known as the XSO and should be available from your data provider (e.g. Norgate Data).

Cheers, Rob


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## Stockbailx (12 August 2021)

Not to sure on the benefits of back testing the small caps. Not a real fan. I mean at best you could resolve the best sectors to trade, and I don't know how it works really but I'd be checking the financials of the stock and looking for compounded stock set to pounce.


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## Frankieplus (12 August 2021)

Stockybailz said:


> Not to sure on the benefits of back testing the small caps. Not a real fan. I mean at best you could resolve the best sectors to trade, and I don't know how it works really but I'd be checking the financials of the stock and looking for compounded stock set to pounce.




Interesting you say not sure about benefits of back testing small caps. Could you elaborate on that one? Is it because they are more volatile? I'm interested in your thoughts as I'm a beginner when it comes to backtesting anything

I am trying to use a trend following strategy to trade on a weekly timeframe. I chose small caps because I thought it would suite this strategy which basically buys breakouts and follows them up with a trailing stop. 

The results are look great if I test it on All ASX stocks with prices from 0.50c to $10 but when I test on all asx small caps with no price filter the results are kind of all over the place a bit. Still ok over a 10 year timeframe but it has 3 or 4 losing years out of 10.. 


-Frank


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## Frankieplus (12 August 2021)

rnr said:


> The S&P/ASX Small Ords is known as the XSO and should be available from your data provider (e.g. Norgate Data).




Ah of course. Thanks  


-Frank


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## tech/a (12 August 2021)

Couple of things 

(1) Survivorship
(2) Liquidity.

If your trading Smalls you'll get issues with both.
Haven't the time to train you.
But adjusting for liquidity say average of $500K traded a day 
Only testing on 24 mths. of data maybe helpful.

From working with a number of quants I've come to the conclusion 
that most readily available Testing software is at best rudimentary
and at worst misleading. Particularly at the hands of people like me
with very basic knowledge of programing and what Im looking for
or more to the point what I should be looking for.

(Although I've designed and tested many
profitably).

Frankly I trade a lot of smalls and there is BIG money to be made on capital invested.
Don't use a system trade discretionary.


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## Frankieplus (12 August 2021)

tech/a said:


> Couple of things
> 
> (1) Survivorship
> (2) Liquidity.
> ...




Good advice, thanks.

Since it's small growth companies I'm trying to target, If I trade all ASX stocks from $0.50 to $10 (but add $500k traded per day as you suggest) in you opinion would I be targeting mostly small growth companies anyway?

I know trading All ASX 0.5 to $10 isn't officially the small caps because there could be larger companies in the mix where their share price happens to be low..

Basically I see no way to get my strategy to give me the results I want targeting the constituents of the index I want to trade (XSO) so I'm trying to do a bit of a workaround by targeting the 0.50 to $10 range of all of the ASX instead.


-Frank


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## Stockbailx (12 August 2021)

I'm no pro at back-testing either. Being Volatile would have nothing doing. You would be finding stock from say $1.50 to confirm a trend. trading a weekly time frame, must make you confident, but to find trending stock would be ambitious but may be hard to do with small caps.  So I still say if its a part of back-testing, confirm stock with good profit compound at all angles. To trade breakouts, you would want to be buying from the support level (trailing stops) and following the breakout out. to proceed with the trend...


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## qldfrog (12 August 2021)

Frankieplus said:


> Good advice, thanks.
> 
> Since it's small growth companies I'm trying to target, If I trade all ASX stocks from $0.50 to $10 (but add $500k traded per day as you suggest) in you opinion would I be targeting mostly small growth companies anyway?
> 
> ...



Do not use SP for small cap determination.many below 20c.some major companies below $10
And then a 10$ sp 15/20y ago is probably a $15 now just with inflation..then as market crashes some will jump in out of your realm...


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## divs4ever (12 August 2021)

for small 'growth stocks '  maybe you need an extra parameter  ( say a market cap.   ... above $4mill perhaps  , or positive EPS )

 i went a lot of times for small caps that paid divs  and sure i got burnt several times  , but not as often as  just trying for those likely to triple in price ( and hope i can sell them that day )

 but maybe the strategy needs a couple of tweaks ( tweaks  are fine when they work for YOU )

 but sure back-test away , it sure beats leaking cash ( imo )

 cheers


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## Belli (12 August 2021)

boring as bat poo EX20 is one way or other ETFs in that sphere.









						ETPs
					

Exchange-traded products (ETPs) on ASX offer access to a sizeable market providing variety and choice across over 200 funds.




					www2.asx.com.au
				




Throw in VISM for international is also a possibility.

Likely to do better than fiddling around thinking doing something beats doing nothing.  Long run it don't.


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## Frankieplus (12 August 2021)

Stockybailz said:


> To trade breakouts, you would want to be buying from the support level (trailing stops) and following the breakout out. to proceed with the trend...




Yes thats what the strategy does. Buy at 20 week breakout and trail stop.. 

-Frank


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## divs4ever (12 August 2021)

qldfrog said:


> Do not use SP for small cap determination.many below 20c.some major companies below $10
> And then a 10$ sp 15/20y ago is probably a $15 now just with inflation..then as market crashes some will jump in out of your realm...



 indeed  , 

 AMP and ORG are still large companies 

 i would re-suggest  a market capitalization parameter  say between $2m  and $20 million  ( but it is YOUR back-test , pick what suits you  )


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## Frankieplus (12 August 2021)

qldfrog said:


> Do not use SP for small cap determination.many below 20c.some major companies below $10
> And then a 10$ sp 15/20y ago is probably a $15 now just with inflation..then as market crashes some will jump in out of your realm...




Cool thanks.. . Could you suggest basic filter I could use to find small caps growth using purely technicals? Other than volume and market cap there wouldn't really much else would there? 

I know we probably need fundamentals thrown in the mix here to determine the growth but I will use Stock Doctor for this after the technical scan for the Small Caps find me the candidates. 


-Franke


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## Stockbailx (12 August 2021)

Frankieplus said:


> Yes thats what the strategy does. Buy at 20 week breakout and trail stop..



That would be hard to Identify, good luck on finding that elusive stock. All the Best!


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## qldfrog (12 August 2021)

Market cap is probably all you can get easily...


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## Frankieplus (12 August 2021)

Stockybailz said:


> That would be hard to Identify, good luck on finding that elusive stock. All the Best!




That would be hard finding just 1 stock 

It's a portfolio I'm building of 20 stocks.. Not just the one stock.. So any stock (hoping small cap) that breaks out of a 20 week range or high  becomes part of the 20 stock portfolio, and then trailing stop.


-Frank


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## divs4ever (12 August 2021)

also maybe thinking of your system as a way to REDUCE bad outcomes  , rather than find the unicorn , could be helpful ( all my 6 baggers were a total surprise to me , even now for a couple  )


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## Stockbailx (12 August 2021)

qldfrog said:


> Market cap is probably all you can get easily...



Would weekly Indicators be of any significant value. Use an Indicators with the correct appetite and settings and you might get yourself on to a good wicket. e.g. might be ATR, MACD, Trend trigger factor. See what you've got in your goodies bag...Try a monthly indication for clarity...


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## Frankieplus (12 August 2021)

Stockybailz said:


> Would weekly Indicators be of any significant value. Use an Indicators with the correct appetite and settings and you might get yourself on to a good wicket. e.g. might be ATR, MACD, Trend trigger factor. See what you've got in your goodies bag...




Could be an option actually. I like the idea of that. I'll see whats in the showbag and keep tinkering


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## peter2 (12 August 2021)

I'd suggest you look through @Skate  "Dump it here" thread. Skate himself trades many mechanical systems based on lower priced ASX stocks that have started to move higher. He trades weekly charts. His portfolio holds anywhere between 20 - 40 stocks. He accumulates positions as the profits accumulate. The thread is a long read but skip through it until you come to his posts on all the systems he tested. You're bound to find lots of good ideas to test. 

If you read that people are wary of systems that trend trade small caps then assume they don't have the experience and knowledge to teach you anything. Most of the current mid caps started as small caps. Yes, a few of the current mid caps were large caps earlier. Trend traders aren't interested in down trends. 

Basically, I'm saying there's heaps of potential in your area of interest. If it was easy then most would be doing it. 

Another source of information would be Nick Radge's book Unholy Grails. He discusses many systems and shows the results.


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## aus_trader (12 August 2021)

Frankieplus said:


> Yes thats what the strategy does. Buy at 20 week breakout and trail stop..
> 
> -Frank



Can't really help with back testing as it's not my expertise. However there are things and pitfalls to look out for such as splits, mergers, take overs, bankruptcies and de-listings that may or may not be included that could skew your results in your favor especially if any de-listed bankrupt companies are not included in the back test results. I have struggled to look up stocks that have been de-listed as google or any other searches are very limited and only shows up currently trading stocks or stocks that are gone more recently. A good resource I found to look up stocks that have lost all shareholder money due to going bankrupt is by searching on website:

https://www.delisted.com.au

However your results mentioned earlier is interesting to me. I actually find it difficult to find small cap gems in recent years compared to say 15 to 20 years ago.

We ASF'ers post potential breakouts and breakouts in the following threads regularly and I believe they can be traded with a profitable edge in the exact way you have described with proper discipline. That is by trend following winners with a trailing stop and cut the ones that fall back without excuses...

Potential Breakout Alerts!​Outstanding Breakout Alerts!​I think the stocks we generally cover on these threads have the qualities that could be suitable to trend trading as there is usually good liquidity and good price action. We should take care to post only quality charts and leave out any illiquid choppy stocks and penny barcode stocks such as these...







I also post a majority small cap portfolio based on company research and discretionary stock analysis in the Speculative Stock Portfolio
which unfortunately cannot be back-tested as it's not based on breakouts or any other technical signal.


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## Smurf1976 (12 August 2021)

Frankieplus said:


> Could you suggest basic filter I could use to find small caps growth using purely technicals? Other than volume and market cap there wouldn't really much else would there?



You could try using a fundamental filter to narrow the range of stocks and see what results that gives with your system.

For example only looking at companies with positive earnings or at least revenue from an actual business narrows it down considerably. Perhaps not that actual criteria but point being any fundamental criteria should be easy to apply as a filter and see what results it brings.


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## tech/a (13 August 2021)

peter2 said:


> Nick Radge's book Unholy Grails. He discusses many systems and shows the results.



One of those systems is *Techtrader*--one of mine.

We traded that live for about 7 years from memory on Nicks site Reefcap.(Now closed)
Started with $30K trading the margin trade list from* BT*---The thinking was that if the stock was in the BT margin list then they were happy with the Funnymentals. Traded on Margin (properly).

Closed it down about a year before the 2008 crash as it had a peak of $450K liquidated value and was at $350K when I shut it down as I was trading it behind the scene with my own $$s. There were very clear signs that something not that good was happening as many in the portfolio were crossing their 200M/A which was the exit. In the end after I liquidated everything all stocks triggered a sale eventually.

Taught me a lot and quite a few others as well.
Worth a look. There are others that are equally as interesting.


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## Austwide (13 August 2021)

One problem in the lower end of the small caps is when they go and raise funds with a low share price offer.
Stop loss don't preserve capital when this occurs (usually) after market. ie price opens 20% lower.

To minimise this from happening, check out section, 8.2 I think of their latest financial statement showing how many quarters of funds are being held.


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## Frankieplus (13 August 2021)

peter2 said:


> Another source of information would be Nick Radge's book Unholy Grails. He discusses many systems and shows the results.




Yes I have read, thanks you. Its Nick's strategy from his book that I want to start trading. But I want to test it on the Small Caps.
Judging from what a lot of you are saying here especially @qldfrog I have decided to use a filter in the code to scan for stocks between $300m and $2b (Small Caps) rather than the S&P Small Index..

New problem now the filter isn't working I'm getting it wrong.. AFI question now I have to ask someone maybe Amibroker support. 

-Frank


-Frank


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## Frankieplus (13 August 2021)

peter2 said:


> I'd suggest you look through @Skate "Dump it here" thread. Skate himself trades many mechanical systems based on lower priced ASX stocks that have started to move higher. He trades weekly charts. His portfolio holds anywhere between 20 - 40 stocks. He accumulates positions as the profits accumulate. The thread is a long read but skip through it until you come to his posts on all the systems he tested. You're bound to find lots of good ideas to test.




I will read it all thanks. I'm quite interested 

-Frank


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## Stockbailx (13 August 2021)

Here's a trick question for you @Frankieplus. As an old school fisherman I'm endorsed by your system and need to investigate it more as it shows strong probability of finding that elusive stock with rage. I'm asking are you actually scanning your stock (throwing out the net) and bringing in hand fills or are you just throwing a drop line and picking the elite. i mean i can see a stock weekly and find probability in a stock but can't back-test hundred and pick an pedigree...


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## aus_trader (13 August 2021)

Austwide said:


> One problem in the lower end of the small caps is when they go and raise funds with a low share price offer.
> Stop loss don't preserve capital when this occurs (usually) after market. ie price opens 20% lower.
> 
> To minimise this from happening, check out section, 8.2 I think of their latest financial statement showing how many quarters of funds are being held.



Great point that we forgot to touch on @Austwide  

This is probably another point that newbie investors and traders are unaware of. I wrote a post about it on another thread, let me see if I can dig that up...



aus_trader said:


> With mining companies I think it's great to see the people at the helm get the thing going right from the get-go. Even if it's a small operation, if they get it running and then fund further exploration / acquisitions etc from that it's a good sign.
> 
> I've seen great deposits go to waste and management sit on them for decades continuously taking the shareholders for goose chases and spruik them up each time to raise capital till they have a hole in their pocket.




With small cap stocks it's easy to fall into the fund raising trap and end up losing so much of your hard earnt. Can I just say it bluntly on this forum: The Fcking directors on some of these small company stocks are pure marketers and they keep marketing the same pipe dream each time to raise funds and keep their pay packets going. Once they empty out the shareholder savings over many years, they'll move onto another small cap to do it all over again.

I've had some bitter experience with these type of scams, so just warning others to stay clear of these type of firms before your heart falls to the floor when the dreaded announcement comes from the asx or the company files for voluntary administration:




I do my best to weed out stocks that has these warning signs from the portfolios I post on this forum, but I don't have psychic capabilities to look into the future, so always DYOR.  On a positive note, some of the promising small caps with the right management can do really well and be quite rewarding for shareholders.


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## tech/a (13 August 2021)

Frank
Why don’t you manually make up a universe to trade then load that in as your universe and
Then apply your technical parameters to it through whatever software.


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## Stockbailx (13 August 2021)

I'm asking because it intrigues me. because as you can bit the bullet on an weekly chart.


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## peter2 (13 August 2021)

I'm surprised by the negativity in this topic. Clearly @Skate 's huge number of system posts haven't convinced some people that it's possible to trade ASX small cap stocks profitably using weekly charts. Skate didn't look at fundamentals. His ranking was based on price, the lower the better. Some shares did fall by 20% and more. So what, each position was only 5% of capital. These small cap stocks can easily increase by 100% in a weekly trend. When price got stuck in a range due to a cap raise or any other reason skate's time stop sold the position and bought another. 

All systems will go through poor periods. If your hoping for a system that generates +30% pa every year trading a large number of positions. I'll tell you, you're dreaming. If you want +30% every year, you'll have to risk a lot in some years. Small caps go in and out of demand many times through out the year. Well financed investors will only gamble with the small caps when their portfolios are performing well. 

I traded a 30 position small cap portfolio live here at ASF for 38 weeks. The performance was +60% in that period. Since then the small cap sector has been off the boil. I would estimate that this portfolio may have only gained an additional 5 - 10% in the rest of the year (14 wks). A lot of work for little extra. Every sector has it's good and poor periods. A profitable system makes more in the good periods than it loses in the poor periods. 

Frank. don't let the negativity slow you down. Yes, it's going to take some work to create a system with robust results. You can do it trading the ASX spec stocks. It won't be perfect but it only has to do a reasonable job because you can create other systems that work better when combined. Build your trading business one system at a time. ASX small caps do have a place in your trading arsenal.


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## divs4ever (13 August 2021)

well i am just not skilled enough , nor set up well to trade 

 as long as any novice decides to trade with their eyes WIDE open  

 then good luck to them

 but have seen on the race-track  in days gone by , how hard it is to control greed after a short run of success 

 and since CCL was taken over  i no longer profit from broken , drunken , ex gamblers  ,


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## aus_trader (13 August 2021)

divs4ever said:


> CCL was taken over i no longer profit from broken , drunken , ex gamblers



Actually there is still another stock that has debut, that may benefit from those drinkers you mentioned...

Endeavour Group Ltd (EDV) has listed and is having a steady run up ever since...




Don't hold but as you said I do miss the Coca Cola company (CCL) on the asx 😿


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## divs4ever (13 August 2021)

LOL

 maybe they will make a profit 

 but more likely to go woke until broke  

 but yes  CCL was my bottled water play   , i was sad to see it go


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## Smurf1976 (13 August 2021)

aus_trader said:


> With small cap stocks it's easy to fall into the fund raising trap and end up losing so much of your hard earnt. Can I just say it bluntly on this forum: The Fcking directors on some of these small company stocks are pure marketers and they keep marketing the same pipe dream each time to raise funds and keep their pay packets going. Once they empty out the shareholder savings over many years, they'll move onto another small cap to do it all over again.



One rule I have with small caps is I only look at companies with an actual, real business that generates income.

Not perfect but that does remove a lot of the silly ones.

Edit - Another one is run like hell from any company where the management seems more focused on marketing the company to shareholders than on running the actual business it's engaged in. 

Doubly so if the nature of that marketing includes elaborate "stunts" of any kind which are superficially impressive but in practice represent no real achievement at all. Pretty much anyone could drive a standard car around Australia or set something on fire for example. Might seem superficially impressive but that's all it is, superficial and in much the same category as the tricks a magician uses on stage to distract the audience from how they're creating the illusion.


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## aus_trader (13 August 2021)

Smurf1976 said:


> One rule I have with small caps is I only look at companies with an actual, real business that generates income.
> 
> Not perfect but that does remove a lot of the silly ones.
> 
> ...



Glad to hear @Smurf1976 and I am pretty much in the same boat now, after falling to the magicians/marketers tricks in the past.

There's no guarantee that there won't be another pitfall in my investing, but I try and stay clear of the landmines that could blow your investing capital to pieces.


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## Frankieplus (14 August 2021)

tech/a said:


> Why don’t you manually make up a universe to trade then load that in as your universe and
> Then apply your technical parameters to it through whatever software.




This is actually a brilliant idea and would be a lot easier.

Ideally I would like to make up a universe selection by market cap. That way I can load it up to backtest. 

I'd like to test Small and Nano caps but as per what some here are suggesting, it's best to not us a Small Caps universe but rather a filter of the whole ASX to filter the small growth stocks. 

I use Norgate Data. At quick glance there doesn't seem to be any way to create such a universe. I will email their support and see what they suggest.

Thanks for the tip 

Here is the selection choice to create my own universe or watch-list as they call it. . There doesn't seem to be any filters I can use to filter via market cap.


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## Frankieplus (14 August 2021)

Stockybailz said:


> Here's a trick question for you @Frankieplus. As an old school fisherman I'm endorsed by your system and need to investigate it more as it shows strong probability of finding that elusive stock with rage. I'm asking are you actually scanning your stock (throwing out the net) and bringing in hand fills or are you just throwing a drop line and picking the elite. i mean i can see a stock weekly and find probability in a stock but can't back-test hundred and pick an pedigree...




I see the point you are making.

To use your analogy there, I am trying to throw a large net out but in the areas where I think there is more of a probability to catch larger fish.  (Hence why I am trying to target the smaller growth stocks)

I'm not really focusing on trade accuracy at all. I'm focusing on win loss ratio. i.e. How much I win when I win and how much I lose when I lose. 


-Frank


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## KevinBB (14 August 2021)

Frankieplus said:


> Ideally I would like to make up a universe selection by market cap. That way I can load it up to backtest.



Hello @Frankieplus

If you have a Westpac Broking account (I have one for emergencies such as this), have a look at their stock screener. Screen shot attached.

Westpac Broking still have the old-style company search where the user can nominate specific values for a filter, instead of the newer style screeners (I dislike these very much) that tell the user what they should be looking for. Westpac Broking stock search is exactly the same as the old original Commsec search, if you are familiar with that.

In Westpac Broking, filter for your stocks, copy the resulting list to a spreadsheet, and then you have an uncle named Bob.

You should be able to add a custom list to that Norgate data list.

KH


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## qldfrog (14 August 2021)

KevinBB said:


> Hello @Frankieplus
> 
> If you have a Westpac Broking account (I have one for emergencies such as this), have a look at their stock screener. Screen shot attached.
> 
> ...



Yes with northgaye fata, you can create your list and use it as part of explore, backtest filter..sadly the list you make today will differ from last year 's one so backtest tesults have to be taken with caution


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## KevinBB (14 August 2021)

@qldfrog  Agree.

Survivorship bias is one of the biggest problems with backtesting. It is also one of the biggest problems with the market index system, a problem that I don't mind taking advantage of my having some (not all) of my investment assets in index based ETFs.

KH


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## Frankieplus (14 August 2021)

KevinBB said:


> Hello @Frankieplus
> 
> If you have a Westpac Broking account (I have one for emergencies such as this), have a look at their stock screener. Screen shot attached.
> 
> ...




This is gold, I never thought of doing it this way!

This will solve my issues. If I can make a custom data list then this is perfect, thanks. I could use any screener to generate the list not just Westpac. 

What would I do without uncle Bob!

-Frank


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## Frankieplus (14 August 2021)

qldfrog said:


> Yes with northgaye fata, you can create your list and use it as part of explore, backtest filter..sadly the list you make today will differ from last year 's one so backtest tesults have to be taken with caution




But the idea to add a custom list to the Norgate list is one I never thought of. 

It opens up the possibility that I can use any other data source to try to find a historical list by market cap. There are free historical data sources available not just Norgate.

-Frank


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## qldfrog (14 August 2021)

Frankieplus said:


> But the idea to add a custom list to the Norgate list is one I never thought of.
> 
> It opens up the possibility that I can use any other data source to try to find a historical list by market cap. There are free historical data sources available not just Norgate.
> 
> -Frank



indeed, I use ETFs custom list for example in my explore


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## divs4ever (14 August 2021)

Trader’s Corner — The Era of Small-Caps And Future of Money​




__





						Trader’s Corner — The Era of Small-Caps
					

Keep up-to-date with all the latest ASX news with Money Morning Australia.



					www.moneymorning.com.au
				




 DYOR


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## Joe90 (14 August 2021)

Frankieplus said:


> I use Norgate Data. At quick glance there doesn't seem to be any way to create such a universe. I will email their support and see what they suggest.



It can be done in Amibroker and I've done this previously but was unable to find my afl code. A Norgate Gold or better AU data subscription is required. This gives access to auextras and a list of ASX fundamentals. 
_marketca_p can be imported, the Amibroker link below shows how its done using the GetFnData("field") where "field" is any of the fundamental data fields supported.
A call to 'Shares Float' x close also gives the current MarketCap.
See here...https://norgatedata.com/data-content-tables.php#auextras (near the bottom of the page).
And here...http://www.amibroker.com/guide/h_fundamental.html


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## tech/a (15 August 2021)

I make many sub universes based on all sorts of criteria in Amibroker.

I just create a new sub folder and name it whatever I want .
from my results I just highlight the tickers I want and save 
or add to folder.
I run a weekly search on my data base for close. That lists in the search all stocks trading.
If needed I can highlight a ticker from there.

These sub folders can be added or subtracted from and used in further searches.
so if your finding things manually you can list the tickers/highlight and save to folders.


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## basilio (15 August 2021)

What is the history of small cap shares that go on a tear ?  Should one take the view that a super promising  3 year performance bodes well for a continuing blossoming of value ?  

For example imagine a scenario where one identifies a dozen shares that have jumped anything  from 1000 % +  to 5863% in just 3 years. Surely, surely this must be some indication of promise perhaps even "the promised land" ? 

Motley  Fool is always up for these projects. Check out the story and imagine where you would be now if you invested 120k across the 12 shares.

October 21, 2016 1:03pm AEDT     







You might be surprised by the list of companies that have produced more than 1,000% gains for their shareholders over the past three years.

Sure, some are highly speculative – and several could easily end up losing their shareholders all of their current gains.
But when you consider the *S&P/ASX 200* (Index: ^AXJO) (ASX: XJO) index has returned just 1.7% over the past three years (since October 21, 2013), 1,000% returns – or more than ten times the initial price are truly astonishing.

If you include dividends reinvested over that time, the Index return becomes 16.2% in total – not a great return at all.


*Company**Share Price**Market Cap ($m)**Gain**Pilbara Minerals Ltd* (ASX: PLS)$0.48$548.75863%*Structural Monitoring Systems plc* (ASX: SMN)$2.54$259.05465%*Resapp Health Ltd* (ASX: RAP)$0.50$293.52994%*Neometals Ltd* (ASX: NMT)$0.36$202.71795%*Agrimin Ltd* (ASX: AMN)$0.64$79.31500%*Cardinal Resources Ltd* (ASX: CDV)$0.71$214.61471%*Magnis Resources Ltd* (ASX: MNS)$0.79$350.91470%*Eden Energy Ltd.* (ASX: EDE)$0.23$280.51189%*Eureka Group Holdings Ltd* (ASX: EGH)$0.74$171.01133%*Farm Pride Foods Ltd*. (ASX: FRM)$1.75$96.61067%*Dacian Gold Ltd* (ASX: DCN)$3.34$453.21048%*Red River Resources Limited* (ASX: RVR)$0.16$48.71043%
_Source: S&P Global Markets Intelligence, Google Finance_
Some of these companies are in hot sectors, but a number also have some very exciting new technology.

Pilbara Minerals and Neometals are lithium companies benefitting from the surging demand for the product for use in rechargeable batteries – not just in mobile phones but growing electric car manufacturing.

Magnis operates in the equally hot graphite sector – hence its share price soaring.

Structural Monitoring Systems has benefitted from the increased demand for real-time monitoring of the structural integrity in products like airplanes, bridges, pipelines and buildings. The company has first-mover advantage and a huge market, although is still loss-making.

Resapp Health wants to develop smartphone apps to diagnose and manage respiratory disease. While it sounds promising, the company is still undergoing trials for its products. 3 years ago, Resapp was called Narhex Life Sciences and was looking at moving into the resources space.

Agrimin has also transformed – from a company called Global Resources Corporation three years ago, into a potash miner in July 2014. Potash is one of the main ingredients in fertilizer – expected to see almost as much demand in future as lithium.

Cardinal Resources is a gold explorer in Ghana, Africa and investors appear excited by the company’s deposits.

Eden Energy is using carbon nanotubes to form a concrete admixture that means concrete doesn’t need steel reinforcing added to it. Tests so far suggest Eden’s product is far superior to standard concrete in many ways.

Eureka Group has profited by moving into aged care and development and management of retirement villages, and is steadily growing its business with big tailwinds behind it.

Egg and egg products supplier Farm Pride has had a strong couple of years thanks to consistent growing profits – mostly by substantially reducing its production costs.

Dacian Gold has profited from the recovery in the gold price of the past few years as well as progressing its 100% owned Mount Morgans Gold Project.

Red River benefitted from the demise of Kagara Ltd, picking up the Thalanga zinc operations from the administrator for just $6.5 million in July 2014. The company is working to restart operations within the next 12 months.

*Foolish takeaway*
It seems clear that each of the companies listed above have exciting developments on the go. Whether they will all be successful is another questions though and not easily answered. My three tips for a closer look would *Eden Energy, Farm Pride and Eureka Group.*

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Scott just revealed what he believes could be the *five best ASX stocks* for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
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*Returns as of May 24th 2021
_Motley Fool writer/analyst __Mike King__ doesn't own shares in any companies mentioned. You can follow Mike on Twitter __@TMFKinga_ _The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a_ _diverse range of insights_ _makes us better investors. The Motley Fool has a_ _disclosure policy__. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson._

​


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## peter2 (15 August 2021)

I don't know what to think of that story or the data in the table. Ignoring it might be best. Unless you're making the point that any fool doesn't know what's going to happen in three years.


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## divs4ever (15 August 2021)

i suspect  there will be plenty of twists  and turns in the next three years ( let alone ten year spans  which i aim to invest in )

 but in the current climate ,  where even mineral resources seem to  be out of the normal cycle  ,  there MIGHT be plenty of shocks and opportunities ahead 

 take care , but have some flexibility


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## basilio (15 August 2021)

peter2 said:


> I don't know what to think of that story or the data in the table. Ignoring it might be best. Unless you're making the point that any fool doesn't know what's going to happen in three years.




Did you check out where those shares are today Peter 2 ? Pilbara has done very well.  As for the rest they are either total dogs,  no longer on the ASX or  still under the original 2016  value.

My point was that Motley Fool managed to find a dozen shares that had jumped exceptionally high in 3 years. This was of course after the event.  Their suggestion is "Hey there are high flyers here. Stick around and we will point out new ones for you "  

The reality for these shares was that they had already reached their highest values. It was overwhelmingly down hill afterwards.

On a personal note I held Eden Energy as one of the high fliers for a period. Excellent technology but has always been incessantly milked by the management for their benefit.


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## divs4ever (15 August 2021)

yes i hummed  and hawed and stalled on EDE  , ( and resisted buying into it )

 time will tell if i made the correct choice 

 sadly there are quite a few managements  content to milk share-holders  with little repercussions


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## Colonel Flagg (5 September 2021)

Norgate Data has watchlists pre-populated eg ASX200, ASX Small Ordinaries etc

I have been trading a weekly breakout similar to Nick Radge's WTT for > 10 years

I have found the best results for the universe are the Norgate All Ordinaries list (top 500) & C < $15


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## aus_trader (6 September 2021)

Colonel Flagg said:


> Norgate Data has watchlists pre-populated eg ASX200, ASX Small Ordinaries etc
> 
> I have been trading a weekly breakout similar to Nick Radge's WTT for > 10 years
> 
> I have found the best results for the universe are the Norgate All Ordinaries list (top 500) & C < $15



Thanks for the info @Colonel Flagg. 

Although I don't use a systematic approach it's good to know where the bang for the buck is and it's also similar to the stock universe that skate is trading in from what I've read.


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## qldfrog (6 September 2021)

aus_trader said:


> Thanks for the info @Colonel Flagg.
> 
> Although I don't use a systematic approach it's good to know where the bang for the buck is and it's also similar to the stock universe that skate is trading in from what I've read.



For info, if you want to catch new muktibaggers,you need to drasticalky decrease your minimum price from $15 to cents and increase your realm from all ordinary to all trading shares.
Nick Radge weekly  was designed / built on xao & high value sp so i expect this xao $15 wirks indeed.
But you will quickly discover better backtest results with wider universe, lower SP and obviously different tuning for your systematic systems.
This also obviously again increase volatility and DD so what is your definition of better?
More $ after 5y, or avoiding a stress related heart bypass?
Using xao was a wrong assumption which cost me dearly in the last couple of years. Still learning
Dyor..


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## frugal.rock (6 September 2021)

Colonel Flagg said:


> I have been trading a weekly breakout similar to Nick Radge's WTT for > 10 years



Greater than 10 years


Colonel Flagg said:


> & C < $15



Less than $15


qldfrog said:


> For info, if you want to catch new muktibaggers,you need to drasticalky decrease your minimum price from $15 to cents



I'm getting technical here Mr Frog, but we don't know what the *minimum* is in this case.
 (I believe 5,10 & 20 cents are common minimums for similar style strategies. Skate was using 5 cent on one strategy, maybe more? )
The *maximum* is $15

I'm not dislexic, but had trouble with greater than & less than symbols at school. 🐸


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## qldfrog (6 September 2021)

frugal.rock said:


> Greater than 10 years
> 
> Less than $15
> 
> ...



My mistake


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## tech/a (6 September 2021)

Don’t think there is a minimum
To me it’s more about liquidity 
behaviour of price in a range (5-15 min charts)
Which in turn lead to hold times —- price won’t go 
vertical for long. Return on risk and capital invested
are my metrics.


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## frugal.rock (6 September 2021)

frugal.rock said:


> I believe 5,10 & 20 cents are *common* minimums for similar style strategies






tech/a said:


> Don’t think there is a minimum



Was just an observation of what I've seen around the traps for systems, where that info is available.
What's your minimum for your scans Mr Duck, or is it $0.001 ?



tech/a said:


> To me it’s more about liquidity
> behaviour of price in a range (5-15 min charts)
> Which in turn lead to hold times —- price won’t go
> vertical for long. Return on risk and capital invested
> are my metrics.




Yes, a brilliant but "fast" paced strategy. Works for you and I, however for some, slow and steady wins the race.


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## tech/a (6 September 2021)

frugal.rock said:


> Was just an observation of what I've seen around the traps for systems, where that info is available.
> What's your minimum for your scans Mr Duck, or is it $0.001 ?



Don't have one.


frugal.rock said:


> Yes, a brilliant but "fast" paced strategy. Works for you and I, however for some, slow and steady wins the race.



My observations are that tickers under 10c need to be traded in line with their volatility.
If there is a 30-100% move they will correct just as violently. If your not on top of this you'll
feel like your being Whipsawed to death. If your aware of it and can read ANY chart 5-15 min
There is a good chance you'll get a big chunk of what's on offer. You dont even have to be Perfect
in your timing---just decisive!

Playing slow and steady in a highly volatile ticker is not going to end well in a very large majority of cases.
You will get the odd 10 bagger but you'll also see countless 30-100% fast moves pass you by or worse
given to you only the hand back often in the very same day!

Larger caps are a little more forgiving but need more capital. NVX has been very good of late. 
BUT while I've held I've seen 3 good moves come and reverse! Could have been much less risk
and more in profit (Realized) had I traded it!--Time for me is the enemy.

There is a lot to be made in this end of town but not for the Procrastinator!  His capital is mine!


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## Colonel Flagg (8 September 2021)

Sorry for the < and > 

yes $15 is the maximum, most are in the 0.5 to $5 range


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