Stock Backtesting

Stock backtesting applies a defined investment strategy to historical data to evaluate an idea before risking capital. Historical results do not guarantee future results.

How to test an investment hypothesis

Define the stock universe, selection date, holding period, weighting, rebalancing, and sell rules before reviewing results. Use an appropriate benchmark and realistic trading costs.

Account for bias and risk

Review drawdowns as well as returns, include delisted companies where possible, and avoid look-ahead and survivorship bias.