Strategy Backtesting

Strategy backtesting is an essential tool to see if your strategy works or not. Backtesting software simulates your strategy on historical data and provides a backtesting report, which allows you to conduct proper trading system analysis.

Accuracy is key

MultiCharts is a solution created specifically for strategy development and backtesting. Our philosophy is that strategy backtesting should be as realistic as modern technology allows.

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Minimal assumptions create more realistic testing
Even though no approximation can be 100% perfect, we have done everything to accurately recreate past market conditions and order execution for strategy trading. Typical backtesting engines have a lot of assumptions and shortcuts, which result in unrealistic testing and unreliable results. MultiCharts is an institutional-level trading platform that minimizes assumptions and considers many factors.

All essential factors contained within

Our backtesting software considers the following essential factors: liquidity, tick-by-tick price changes, ask-bid-trade price differences, commission, slippage, initial capital, interest rate and trade size.

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Taking liquidity into account
When MultiCharts’ engine backtests a strategy, it recognizes that not all limit orders will be filled, due to a lack of liquidity. For this reason, you have a choice to fill orders when a price target is hit, or when it is exceeded by a certain number of points (pips).

Tick-by-tick simulation
We call this feature the Bar Magnifier. It is essential for increasing precision during backtesting. MultiCharts can construct larger bars out of smaller components—second and minute bars out of ticks, hour and day bars out of minutes. You can recreate exact price movements within each bar by using the Bar Magnifier, which will build larger bars out of smaller components. For example, one-hour bars have four visual points—open, high, low, and close. The Bar Magnifier can invisibly load minutes that make up the hour, and strategy will be backtested on a minute-by-minute basis.

Ask, bid, and trade prices
Backtesting takes into account that real buying happens at ask prices, real selling at bid prices. This makes our backtesting simulation as realistic as possible.

Strategies for immediate practice
MultiCharts’ backtesting engine even emulates market, stop, limit, stop limit, and one-cancels-other (OCO) orders. Profit target, stop-loss, and trailing stops are also standard backtesting features. On top of that, MultiCharts comes with more than 80 EasyLanguage strategies, so you can practice backtesting.

Easy to read

You can change how your signals appear on your chart—in just a few clicks. Exit orders can be connected by a visible line to all related entry orders—the line will be green if the trade was profitable, red if not. If you don’t like those colors, or any other visual aspect, you can easily change it.

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Risk Warning:
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.