CAGR
Compound annual growth rate: the constant yearly return that would turn the starting capital into the ending capital over the backtest period. Lantern computes it on 36 months of returns.
Algo trading metrics glossary
Plain-language definitions of every metric on Lantern by Fintrens algo performance pages.
Cumulative return
Total percentage gain from the start to the end of the period, on the maximum allocation of the algo.
Drawdown / max drawdown
The decline from a previous equity peak. Max drawdown is the deepest such decline; average drawdown is the mean depth across all months the algo was below its peak. Time to recovery is how long it took to make a new high.
Sharpe ratio
Annualised excess return (over a 6.5% risk-free rate) divided by annualised volatility. Above 1 is good, above 2 is excellent.
Sortino ratio
Like Sharpe but only penalises downside volatility, so strategies with large upside months are not punished for them.
Calmar ratio
CAGR divided by the absolute max drawdown. Shows how much return you earn for the worst pain you had to sit through.
Alpha
Return in excess of what the benchmark (NIFTY 50 for India, S&P 500 for US stocks, Bitcoin for crypto) would have delivered for the algo's beta. Positive alpha means the algo added value beyond market exposure.
Beta
Sensitivity of the algo's monthly returns to its market's benchmark. A beta near zero means the algo is largely independent of market direction.
Win rate / success ratio
Share of trades that closed with a profit. A low win rate can still be profitable if winners are much bigger than losers (see risk : reward).
Risk : reward
Average profit per winning trade divided by the average loss per losing trade.
Stop-loss (SL) per trade
The maximum loss, as a percentage of allocation, the algo allows on a single trade before exiting. You can sort the marketplace by SL to find the tightest risk control.
Correlation
How closely two algos' monthly returns move together, from −1 to +1. Combining low-correlation algos reduces the combined drawdown.
Profit share
A percentage of the net monthly profit an algo makes for you, charged only above the high-water mark, in addition to the subscription fee.
High-water mark
The highest equity level your account has reached with an algo. Profit share applies only to gains above it.
Credit spread
An options position that sells one option and buys a further out-of-the-money option of the same type, collecting a net premium with a capped maximum loss.
White box
A strategy whose provider discloses the trading rules ("How it works") to subscribers alongside the verified performance.
Black box
A strategy whose provider keeps the trading logic confidential. The platform still verifies the backtest and tracks every live signal, so performance and risk figures are independently checked.
RA licence
SEBI Research Analyst registration. Any signed-in user can publish white-box strategies; to list a black-box strategy publicly, the provider must add their RA number and certificates in account settings and be approved by the platform.
Iron condor
Two credit spreads (one call, one put) around the current price. Profits if the index stays within a range until expiry.