Testing your trading strategy is one of the best ways to see if it is consistently profitable. You can also use backtesting tools to make adjustments to your strategy and see which market conditions are best suited to it.
Choosing the right stock backtesting software is essential to getting the data and insights you need to improve your trading. We tested more than a dozen backtesting tools to bring you our top 5 picks:
- Overall the best backtesting software – Trend Spider
- Best backtesting software with tape playback – Trading View
- Best advanced backtesting tool – Trade ideas
- Best free backtesting software – Treadwell
- Best backtesting software for investors – Stock Rover
Top 5 Stock Backtesting Software
Let's take a closer look at our favorite backtesting tools to help you decide which is best for your trading style.
Best Backtesting Software Overall – TrendSpider
TrendSpider is our favorite backtesting software overall. It's customizable enough to allow you to test any strategy based on price action or technical indicators, but no coding is required.
Additionally, since TrendSpider can automatically draw trend lines and candlestick patterns on charts, you can include trend line intersections and candlestick patterns in your strategy. This is not possible with most other backtesting tools.
TrendSpider gives you a great deal of control over your strategy's exit conditions, allowing you to set up trailing stops, profit targets, and candle limits. You can view each entry and exit on a technical chart as well as plot the overall results of your strategy to see how successful it is. If you want to improve your strategy, you can make changes, run it again, and TrendSpider will show you the new results alongside your previous results.
The only major drawback of TrendSpider is that you can only run strategies on one indicator symbol at a time, not on groups of symbols.
Key Features:
- Build strategies that include trend lines and candlestick patterns
- No coding needed to build custom strategies
- View entries and exits on advanced technical charts
- Compare results side by side when refining your strategy
Best Backtesting Software with Replay Bar – TradingView
TradingView allows you to build and test custom trading strategies using the Pine script editor. Although there is some coding involved, it is fairly easy to use. You can rely on over 100 built-in indicators and a wealth of community-contributed trading strategies if you want to avoid writing your own code.
The TradingView strategy backtest displays key performance metrics about your strategy such as net profit, maximum withdrawal, Sharpe ratio, profit and loss ratio, and more. You can also view every trade your strategy would have made in a spreadsheet or on your stock chart.
What's really great about TradingView's backtesting tool is that you can use tape replay to go back and see how the price action executed when your strategy was triggered. For example, a day trader can see how candlesticks form heading into a profitable trade, and then look for similar price action in the future. TradingView supports tape replay on all timetables, including the 1 second bar.
Key Features:
- Build custom strategies with the Pine script editor
- Replaying the bar enables you to replay price action around entries and exits
- Includes over 100 built-in indicators and millions of community-contributed strategies
- Display entries and exits on your charts
Best Advanced Testing Tool – Business Ideas
Trade Ideas is one of the most powerful backtesting software platforms for experienced traders. In addition to offering a wide range of customization options for building strategies and setting backtesting conditions, Trade Ideas provides custom tools to help you improve your strategies.
As an example of how this works, let's say you have an intraday trading strategy that doesn't seem profitable when you first backtest it. With Trade Ideas, you can dive into your strategy to look at profitability at different time periods during the day. You may find that your strategy is very profitable if you only apply it during the first hour of the trading day.
Trade Ideas also allows you to run backtests on combinations of ticker symbols, so you can optimize your strategy by symbol, stock price, or other factors. You can run multiple backtests and compare detailed results side by side. It's a great program for traders who want to dig deeper into what aspects of their strategy work and understand at a deep level what areas can be improved.
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Key Features:
- Optimize strategies based on symbol, time of day, stock price, and more
- Compare backtest results side by side after making changes to your strategy
- Supports daily and swing trading strategy time frames
- Detailed data including profits, trades and withdrawals on a daily basis
Best Free Backtesting Software – Tradewell
Tradewell is one of the few trading platforms that offers backtesting tools through its free plan. This makes it a great choice for traders who are trying backtesting for the first time or want to reduce their spending on trading software.
Tradewell's free tester includes five years of historical data and a variety of popular technical indicators. You can't create your own indicators with Tradewell, but the interface is flexible enough to support most swing and momentum trading strategies.
Tradewell does not require programming, so it is easy to use for beginners. The software also offers several ways to visualize backtest results, including scatter plots, bar charts, and tables. The data is surprisingly in-depth and helps you analyze the potential for your strategy to be profitable on different time frames.
Key Features:
- Free backtesting with five years of historical data
- Earnings potential analysis of future signals
- There is no coding required to set up backtests
- Paid users can backtest using up to 100 years of historical data
Best Backtesting Software for Investors – Stock Rover
Stock Rover doesn't explicitly offer backtesting, but it does allow you to examine historical stock data going back 10 years. If you're comfortable using the platform's equation editor (which is a bit like programming), you can create backtests effectively. Stock Rover will show how a stock has performed from when it first passed your strategy screen to the present.
The great thing about Stock Rover is that it focuses more on fundamental investing strategies than trading strategies. You can create backtests on earnings growth, fair value models, analyst ratings, cash flow metrics, and more. Stock Rover also supports some popular technical indicators, helping you identify entry and exit points for your backtest.
It would be nice to see Stock Rover add a dedicated backtesting tool. But even without that, it is one of the most powerful platforms that enables long-term investors to create custom backtests.
Key Features:
- Build backtests with underlying data
- Provides 10 years of historical data
- Determine entries and exits with technical indicators
- See how stocks will perform after passing your strategy requirements
What to look for in a stock backtesting software
Here are some of the most important things to consider when choosing a backtesting tool.
Historical data: Backtesting software should provide at least 5 to 10 years of historical data, and ideally more. Analyzing more historical data can give you more confidence in your strategy and enable you to see how it will perform under very different market conditions.
Data visualizations: Your backtesting platform should provide you with multiple ways to visualize the results of your backtesting. This can include plotting entries and exits on charts, presenting scatter plots and bar charts of trade returns, and line charts showing your account balance and withdrawals. You should also get tables detailing all the trades executed during the backtest.
Support custom strategies: Many backtesting tools require some degree of programming to build custom strategies. There are some no-code backtesting options, but rest assured that these tools offer enough flexibility to allow you to test and tweak your strategy.
Strategy improvement tools: Strategy optimization tools can help you determine when or how to implement your strategy to maximize your profits. They can also help you adjust your strategy to minimize losses or maximum withdrawals, thus limiting your trading risks.
Frequently asked questions about inventory testing software
How is inventory backtesting software different from inventory checking software?
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Both stock testing software and stock screening software enable you to create a customized trading strategy. However, backtesting tools allow you to see how your strategy has performed in the past using historical price data. Screeners help you find stocks that meet your strategy's entry requirements right now.
How long should you backtest a trading strategy?
The amount of historical data that will be used to backtest a trading strategy depends on the time frame of the strategy. It is usually a good idea to backtest intraday strategies using several months' worth of price data. Swing trading strategies may use several years of price data. Investment strategies may require 10 years of data or more to provide confidence in the results.
Conclusion: Best Stock Backtesting Software
Stock testing software can help you evaluate whether your trading strategy is profitable and optimize it to reduce risk. TrendSpider is our pick for the best backtesting platform overall, followed by TradingView and Trade Ideas. Tradewell is the best free backtesting software, while Stock Rover is the best choice for long-term investors.
