Backtest Strategy

This is a quick overview of our proprietary event-based Backtesting Tool, the OddsMaker. Further tutorials will discuss its features in more detail. The Oddsmaker enables you to evaluate how well your strategies perform over recent history. You can determine the profit factor, the win rate, compare the average winner versus the average loser, and see the projected return of the strategy.

You can define your starting equity, your position size, and even add your broker's commission.

The backtest will show you the equity curve that your strategy produced and your daily profit and loss. In addition to that, you can see how many trades would have taken place each day, what the maximum drawdown was, and how much buying power was needed.

The color-coded calendar shows you the metrics per day, and a double-click reveals the individual trades. You can look at the different filters, see how they impact the results and adjust their values to optimize your scan.

In addition to that, the Oddsmaker enables you to refine and optimize your scans. The optimization tab allows you to drill down into the details of the strategy to see what makes it work. Each tab contains a reporting engine that can break down your strategy by different filters, allowing you to see which subsets of the trades work well and which don't. You can use the information here to add additional filters to your strategy to improve it.

Please note, the OddsMaker follows particular rules for entering into a trade. It starts with the earliest alerts and moves to the latest. Typically, there are 64 days worth of history in the database. The OddsMaker does not look at any data for the current trading day. It does not backtest in the premarket or postmarket session. Once it enters a position for a specific stock symbol, it will not look at that stock again for the rest of the trading day. However, each day starts fresh, and it will enter a new trade for the same stock symbol on the following days.

Our backtesting tool, as well as most other backtesters, is based on the open, high, low, and close data of 1-minute candles, not on tick-by-tick data. Because of this, you are likely to see discrepancies between testing results and actual trading. The back-tester is not designed for high-frequency trading or rapid scalping strategies. If your strategy is based on very fast price action, you might not see an accurate portrayal of real-world results. The OddsMaker will use historical data for the exit price and doesn't factor in the spread. In live trading, there is no guarantee that you will get this exact price.

Because of these differences to live trading, we recommend that you first successfully backtest and optimize a strategy, Then test it in paper trading mode, but under real market conditions, and only after that move to live trading.

To access the Oddsmaker, right-click into the Alert Window, and select, Backtest Strategy from the menu. This will open the Oddsmaker Configuration Menu. To learn more about backtesting, head to the Oddsmaker section.