Top 5 Stock Trading Backtesting Softwares for Traders


Do you know you can backtest your stock trading strategies with stock backtesting software? Stock backtesting software is a program that allows traders to test potential trading strategies using historical data. In the top 5 stock backtesting software, we will cover software that is suitable for all types of traders from newbies to professionals.

11 May, 2020, | AtoZ Markets – Stock backtesting software allows you to check the effectiveness of your trading strategy with a detailed report regarding risk: reward, drawdown, winning %, etc. However, finding quality backtesting software is not easy.

In 1980, traders would make their trades on charts; therefore, backtesting was a pretty straightforward concept. Later on, in the 1990s, people started using computer monitors to see visualized data. Currently, many vendors have implemented stock backtesting Softwares that might cover all of your needs but you need to find the right one for you.

The electronic process of backtesting software lets traders check results online and identifies the use of strategies. Moreover, technological advancements have simplified the process for us. Since then, the process improved but not always for the better.

Before proceeding to the top 5 stock backtesting software, let’s start with what the backtesting is.

What is Backtesting?

Backtesting is a process to check the performance of a trading strategy in the historic data. It is a vital tool for a trader’s toolbox, without which they wouldn’t even consider diving into the market. It is very important to analyze the market before purchasing anything. Similarly, before implementing a trading strategy into the real chart, it is necessary to see how it works at different times and different market conditions.

Stock Backtesting works as an approval to implement a trading strategy with real money. For example, say, you want to check a technique that supports the notion that Internet IPOs outperform the general market. If you were to test this trading strategy during the late 90s, the procedure would outperform the market significantly. However, the maximum past performance doesn’t guarantee future returns’ as the financial market is ever-changing.

Finding the right stock backtesting software is crucial for every new trader as it will save money and time. We have done an extensive analysis of stock backtesting software. therefore, we will represent the top 5 stock backtesting software in the following section.

Top 5 Stock Backtesting Softwares

There is a lot of backtesting software available on the internet. Some software is free to use but does not provide a satisfactory capacity for backtesting. On the other hand, some software is paid and very useful. In the top 5 stock backtesting software, we will see both paid and free software that can cover needs for every type of trader. 

The list of top 5 stock backtesting software is mentioned below:

  1. Tradingview
  2. MetaTrader 5 Strategy Testing
  3. MetaStock’s Backtesting Software
  4. Interactive Brokers’ Portfolio Manager
  5. The TrendSpider

Let’s have a look at them one by one.

1. Tradingview

Tradingview was launched in 2011. It is an easy and web-based platform for stock and forex backtesting. The real-time data and mostly accurate price charts make it possible to research the market from anywhere.

They have implemented backtesting effortlessly and intuitively. To use tradingview for backtesting stock strategies, following these steps:

  • Implement the trading strategy in the chart.
  • Turn on Bar Replay by using the icon on the toolbar at the top of the trading screen.
  • After activating the chart, a new toolbar will appear, and a vertical red line will appear on the cursor. The replay will begin from the red line area. You can scroll back to the point where you want to start.
  • Click on the chart to get into replay mode. Therefore, click on the play button so the replay can start.
  • The playback feature is a fantastic tool to understand what the charts looked like on a specific day. 

Tradingview report AtoZmarkets

The report of the backtesting is pretty good. After completing the backtesting, a tab will show you the profit performance of the strategy that includes:

  • Net Profit
  • Buy & Hold Return
  • Number of Trades
  • Charts on trade performance
  • Drawdown
  • % of Profitable Trades

Pros of Tradingview

  • Easy to Access from a web-based platform
  • Manual Backtesting
  • Mostly accurate financial data
  • Lots of trading instruments like Forex, stocks, cryptocurrencies, and ETFs

Cons of Tradingview

  • Backtesting is not available for the entire market
  • It does not include fundamental analysis.

2. MetaTrader 5 Strategy Testing

The MT5 Strategy Tester allows you to test Expert advisors based strategy before implementing them for live trading. During testing, you need an Expert Advisor to test initial parameters on historical data. During optimizing the tester, a trading strategy runs several times with different settings, which will allow you to select the most suitable combination thereof.

The MT5 Strategy Tester is a multi-currency tool. Therefore, it will allow you to test and optimize strategies in most of the stocks. It will automatically process the information on all trading instruments that are used in the trading strategy. Therefore, you do not have to specify symbols for testing manually.

The Strategy Tester software is multi-threaded. Therefore, it will allow you to use all available computer resources. Testing and optimization are processed through special computing agents that are installed on the user’s computer.

stock backtesting software

Moreover, you can connect an unlimited number of remote agents to the Strategy Tester. Also, it is capable of accessing the MQL5 Cloud Network. Therefore, it will bring together thousands of agents around the world, and it is available to any user.

In addition to Expert Advisor testing and optimization, you can use the Strategy Tester for custom made indicators.

Pros of MT5 Strategy Tester

  • Available on widely famous MetaTrader platform.
  • Easy to backtest EA’s and robots
  • Visual testing is available
  • Detailed Testing reports

Cons of MT5 Strategy Tester

  • It does not include fundamental analysis.

3. MetaStock Backtesting Software

After launching the MetaStock, you will see the power console. It will enable you to select what you want to do. You can choose a System Test that will allow you to access 58 different systems for backtesting. In the example below, there is a MACD Expert System run on Nasdaq 100.

After completing a backtest, it will list every buy or sell trade with drawdown on the portfolio chart. You can click on any trade to see the background, size, duration, and profit or loss.

stock backtesting software

MetaStock has a massive amount of inbuilt systems and Expert Advisors. Therefore, it will help the beginner or intermediate trader understand and make a profit from technical analysis and well-researched trading systems. It is a vital area of advantage.

The inbuilt systems may not make you super-rich. However, the reason you want to backtest and create your system is to get an edge in the market. If you have some scripting or programming skills, you can achieve this with MetaStock. If you do not, you can ask MetaStock Partners to assist you in building a trading system.

Pros of MetaStock

  • Provide a report with drawdown and ROI
  • Easy to backtest in just 1 click.
  • lots of indicators and real-time news

Cons of MetaStock

  • Need Some Scripting Skills
  • No Automated Trade Execution

4. Interactive Brokers’ Portfolio Manager

The “Portfolio Manager” tool on the powerful Trader Workstation (TWS) platform is well designed and easy to use. It is created to help portfolio managers who manage a portfolio of stocks. Most of the portfolio managers are not trading stocks based on technical indicators like MACD, Stochastic, or Moving Averages, and they make trading decisions based on the fundamentals of a particular company.

stock backtesting software

The unique feature of this backtesting software is that you can choose a portfolio to backtest based on most of the major fundamentals, such as EPS growth, Acid test, P/E Ratio, and even Analyst ratings. Therefore, you can enjoy seeing stocks that are suitable to buy at the P/E ratio with high analyst ratings from Zacks. Overall, this broker has unique features that are most powerful in the industry.

Pros of Portfolio Manager

  • Best for fundamental backtesting
  • Direct Market Access
  • Most of the instruments are available

Cons of Portfolio Manager

  • Limited Backtesting On Chart Indicators

5. The TrendSpider Backtesting

TrendSpider uses a different approach to backtesting. As the platform is built with a ground that can detect trend-lines and Fibonacci patterns automatically, it already has many backtesting tools into the heart of the code. The highest probability trend-lines are automatically drawn on the chart, and you can adjust the sensitivity that controls the detection.

Adding to this, they have a strategy tester that allows you to type what you want to test and code. It is a simple implementation that completes in minutes. One of the other elements is the ability to adjust your backtest conditions. You can jump into the coding section if you want to.

Tradespider interface AtoZmarkets

The pricing of TrendSpider is also excellent starting at $27 per month, including real-time data. They have expanded to cover Forex, stocks, Crypto, ETFs, and Futures, which means you can apply auto Trend-lines with multi Time-Frame Analysis on different markets. The platform is built on HTML 5; therefore, it needs zero installation and Zero data configuration.

Pros of TradeSpider

  • Automated Trend Line Detection
  • Real-time Exchange Data
  • Multi-TimeFrame Analysis

Cons of TradeSpider

  • Autotrading is not available.

Conclusion

Traders who apply only computing power on their trading strategy are likely to suffer huge losses. The main drawback of any backtesting software is that it cannot replace human psychology with the right tools.

Therefore, besides backtesting, there is more to do with human logic. Moreover, risk vs. reward and money management is a vital part of every strategy that distinguishes between successful and unsuccessful traders.

Think we have missed something? Let us know in the comment section below!

  1. Volker says:

    OMG, you did not miss something,

    Promotional content was edited off the comment.

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