Many new traders wonder how to develop their own entry and exit signals and build their own trading systems. I wanted to share a few sites that provide basic backtesting functionality on a web based platform. These provide enough parameters to begin to get an idea of how different signals perform in different timeframes.

  1. First you need a theory of how the historical market price action in trends, swings, or reversion to the mean.
  2. Then you pick signals that you believe will quantify your theory by capturing price moves.
  3. Your system will need either a high winning percentage with small losses or you will need big wins and small losses. These are the only two paths to profitability.
  4. You will need to test your signals through up trends, down trends, and sideways markets to see the systems viability through different market conditions.
  5. You want to target your expectations for annualized returns and set your limit for drawdowns.

ETF Replay is a site that provides free backtesting for ETFs using moving averages, moving average crossovers, and a free ETF portfolio back test function. This site has 17 years worth of price data and is enough to go through all different market cycles. This site has a free function with 5 ETFs you can back test. The paid subscription gives you access to the universe of ETFs. I have been a subscriber to this site for years.

ETF Screen is a site that does not have the same thoroughness of data as ETF Replay but it is completely free. It has a lot of ETFs and 10 years of data. The options are nowhere near as robust as ETF Replay but is a great place to start with basics for free.

Stockbacktest.com gives traders moving averages and moving average crossovers, to test both long and short all the way back to the 1991. It gives you access to both stocks and ETFs. Quite a thorough free web based platform with many options to explore.

Kora Reddy has done outstanding work with Past Stat: All Stats and No Fiction, quantifying a universe of different types of signals, and providing a huge amount of equities to choose from when backtesting the past four years of data. Five free back tests a day and a free trial period.

Of course there are also plenty of paid backtesting software options out there. You can make backtesting as simple or as complex as you want but all that matters is whether you can follow your system in real time and whether it makes money in the long term. These are examples of four great sites to start with when learning the historical dynamics of the stock market’s price history, and the trading principles that make money.

We have created a Backtesting 101 eCourse for those who want to learn about the parameters to look for in a good backtest:

Backtesting 101 eCourse at New Trader U