Strategy Testing

After initial coding, a strategy can be tested. We always believe that the only way to gain an insight into the possible profitability of a strategy is to backtest it against historical data to see how it would have performed in the past. The backtesting process takes place entirely within the Portfolio Analyser.

Strategy Development Single Stock Chart

 

The first stage of testing is to backtest against individual securities and to inspect the results on a price candle chart. Each buy/sell signal is visible on the chart, together with the "profit stripes" that show whether a trade was profitable or not. The charts may be used to display additional indicators or studies and these can be explicitly plotted from within the strategy's code.

During this stage it is usually possible to gain an insight into whether the codification of the strategy has been successful. If this is the case we move on to using the analyzer to test against entire portfolios of securities.

 

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