Why Backtesting Matters for Every Investor
Backtesting is essential for investors aiming to assess the potential performance of trading strategies before risking real money. It involves applying trading rules to historical market data to see how strategies would have performed in the past. While backtesting tools were once the domain of tech-savvy traders, platforms like TradeStation and MultiCharts have simplified this process, making it accessible to non-techies.
Top Backtesting Tools for Non-Techies
TradeStation
TradeStation is a leading platform known for its powerful backtesting features and intuitive interface. Its development environment makes strategy creation straightforward by using commands close to plain English. For example, writing a rule like “Buy when the 50-day moving average crosses above the 200-day moving average” doesn’t require any coding skills. Once the backtest is complete, automating the strategy is just a few clicks away.
TradeStation supports real-time execution, turning strategies into automated trading systems effortlessly. Additionally, it supports portfolio-level testing, enabling investors to backtest entire portfolios of stocks, ETFs, or futures simultaneously. While TradeStation excels at many aspects of backtesting, MultiCharts offers superior portfolio-level testing. Notably, TradeStation also provides free historical market data, making strategy refinement more accessible without additional costs.
I do not recommend to use this strategy; Here is an example of two line code strategy which has demonstrated 560K return after commission and slippages on Gasoline Futures from 2005, with 3 loss years(2008,2018,2023).
if entriestoday(date) <2 then sell short next bar at lowD(1) stop ;
if entriestoday(date) <2 then buy next bar at highD(1) stop ;
Multicharts
MultiCharts is another powerful platform known for its ease of use and suitability for non-tech users. It integrates with multiple brokers and it’s standout feature is portfolio-level backtesting, which enables users to evaluate strategies , stratagies co-relation across various assets at once. The best part is that strategies developed in TradeStation’s EasyLanguage work seamlessly on MultiCharts, providing flexibility and cross-platform compatibility. Imagine you can place and manage orders automatically on interactivebrokers or a cryptocurrency on kraken with the same coding language.
Portfolio-Level Testing: The Game Changer
Portfolio-level testing helps traders evaluate multiple strategies across different assets, enabling them to manage risk and maximize returns. Both TradeStation and MultiCharts support this feature, letting you simulate diverse market conditions in one comprehensive test.
Portfolio123 is also a decent tool for backtesting stocks or ETF portfolios and rebalance at predefined frequencies. There are grey areas on the details of how it calculates, hence my confidence is limited till get a good grip on their tool.
Final Thoughts:
With TradeStation’s free historical data and MultiCharts’ portfolio level testing , and due to their common easylanguage capability, backtesting no longer requires deep technical skills. These tools empower non-techies to design, test, and automate trading strategies, transforming investment ideas into actionable plans with just a few clicks.
