Before you put your trading strategy to work, it is essential to test it. The fundamental ways to evaluate your trading strategies include backtesting and forward testing.
Backtesting refers to testing your strategy using historical data sets. Forward testing, on the other hand, refers to evaluating your trading strategy using simulated environments.
As a trader, testing your trading strategy is of utmost importance, as it will not only help you avoid huge losses but also help you trade stress-free.
Here are some trading platforms you can use for trading strategy evaluation:
1. PHI 1:
As an all-in-one algorithmic trading platform, PHI 1 allows multiple testing strategies like bulk backtesting and forward testing (simulations), which you can achieve with the click of a few buttons, on a single dashboard.
All you need to do is select your parameters such as capital, slippage costs, and the risk controls you want to use for the tests.
PHI 1 also offers a unique feature called scenario grading. This is a disruptive offering that scores your strategy for various market scenarios such as volatile, sideways, and crash.
Comes with a form-based strategy creator so you don’t need coding knowledge to get started
It runs on cloud; no download or installation is required.
2. Streak by Zerodha
Allows backtesting to show results for metrics like maximum gain, maximum loss, average gain, average loss, etc. with a look-back period of up to five years.
You can run backtests using various parameters and also adjust for brokerage costs and other charges.
Streak does not offer simulations and scenario grading.
It runs on cloud; no download or installation required
AmiBroker allows you to backtest your trade set-up for multiple stocks as well as at the portfolio level, uses some pre-defined values like portfolio size, periodicity (daily/weekly/monthly), commission charges, interest rate, maximum loss and profit target stops, type of trades, price fields which can be changed.
However, you need to type in a strategy formula that contains at least buy and sell trading rules.
Amibroker also allows access to Monte Carlo simulation to check for worst-case market scenarios.You can also test the robustness of your trading strategy by evaluating its out-of-sample performance to avoid over-fitting after in-sample optimization.
Amibroker can be a pricey alternative for Indian traders and requires coding knowledge to use the platform.
NinjaTrader’s Strategy Analyzer tests automated strategies via backtesting and optimization.
It is designed for use of strategies built using NinjaScript, NinjaTrader’s modern C# based trading framework
You can select the Strategy Analyzer parameters like strategy, instrument, interval type and value and time frame.
The results display all performance statistics and metrics, data for various time periods for analysis, and charts.
However, NinjaTrader is available only on Windows.
MetaTrader 5’s Strategy Tester allows back testing, forward testing, and optimizations.
The Strategy Tester offers various testing modes, e.g., its Random Delay mode simulates network delays during the processing of trades
You can use custom settings during strategy testing like trading limits, margin settings, and commissions.
You can view results in graphical view and also perform visual testing
MetaTrader 5 is primarily used by Forex traders. Besides this, the programming language and advanced features might be difficult for beginners.
If you’re willing to try a one-stop trading platform with screening, charting, easy strategy creation, backtesting, forward testing and scenario grading, and deployment, PHI 1 can be a cost-effective option for you.
PHI 1 uses large sets of data to help you bulk backtest your strategy, offers a simulated environment for forward testing, and also ranks your strategies in multiple market scenarios.
Want a first-hand experience of how PHI 1 can elevate your trading?