Minimize Risks with These Top Stock Backtesting Tools

When you develop a strategy for trading stock, you are unsure whether the strategy is a good one. Jumping into trade with your strategy can be risky when the outcome is uncertain.

What if there was a way to test your strategy without risking your capital? This is where stock backtesting comes in.

How Stock Backtesting Works

Stock backtesting is a way to evaluate strategy without risks. The idea behind stock backtesting is that a strategy that worked previously will work in the present or the future and vice versa.

So, backtesting works by using historical data and technological tools to assess a strategy to see how effective it would’ve been if you had adopted it at some time in the past.

What Are the Pros of Stock Backtesting?

• You get to know which strategy is profitable and which strategy isn’t.
• It creates room for improvement on risky strategies.
• It provides a quick way to test a strategy with multiple trades.

What Are the Cons of Stock Backtesting?

• Backtesting may cause overconfidence which could lead to hurrying into live trades without testing on a stock market simulator.
• Even after a backtest, you still have to live test your strategy to determine slippage and trading cost.
• Backtesting results may not be as realistic as live trading results.

Recommended Stock Backtesting Platforms

Some of the best stock backtesting tools that we recommend include the following:

1. Trade Ideas
2. Finviz
3. Trading view
4. TrendSpider

Trade Ideas

Trade Ideas is a platform that runs basically on artificial intelligence. It uses algorithms powered by artificial intelligence to generate trade ideas that can be included in a strategy.

The backtesting feature allows you to create strategies without coding. Trade Ideas also analyzes results and offers suggestions for optimizing your strategy.

Finviz

Finviz offers a pretty standard tool for backtesting that only features price action indicators. Nevertheless, it’s a great tool for developing stock trading strategies. The platform is easy to use and informative as well.

Trading View

Although not the most advanced among its peers, Trading View’s backtesting tool has a user-friendly interface, which makes it very easy to use. Investors and traders alike share their strategies on the website and you can create your own strategy by coding in Pine Script. Trading View includes all the necessary TA features of a TA platform.

TrendSpider

TrendSpider is a relatively new platform compared to other platforms on the list, but the tools it offers are pretty creative and unavailable elsewhere.

Not only does it let you scan stocks, but it also features a very effective backtesting tool. Creating strategies on this platform is easy and you do not have to write code if you do not want to.