Backtesting

[lasherm1 10]

Hi All: I'm investor (15 years) looking to make a switch to swingtrading. I have a few ideas that I would like to test. Can anyone recommend a decent online service/download where I can backtest these models? I'm somewhat cheap (I'm a value investor!), so low/no cost would be great. Also, I'm not a good programmer, but can work very well in excel.

 

TIA

LASH

[ant 10]

lasherm1,

 

Although I haven't used it myself, I've heard good things about Amibroker (http://www.amibroker.com). I think it is the least expensive option out there and easier to use than some other options, from what I've heard. I believe you can download free data from Yahoo or MSN. I use Wealth-Lab and TradeStation for backtesting.

[lasherm1 10]

Thanks Ant! That does look good (and fits my budget). I also found a free version if you have a fidelity account (>$25K balance) -- https://communications.fidelity.com/wealth-lab/

 

How accurate is the backtesting vs actual performance? I know there are lots of unknowns (trader disipline, slippage, etc), but does the relative performance of the testing come close to one's real performance?

[Soultrader 12]

Backtesting is accurate but you need to understand that market conditions change all the time. If you are testing a system, you need to make tweaks or changes to it with the changing market environment.

 

Also once you have real money on the line, all the backtesting in the world is not going to help you if you can not follow your trading plan/system.

 

Give a reckless trader a good system and I have my money that he will not profit from it.