Option Backtesting Software for Traders in India

Posted by Kalpesh on March 6th, 2023

Earlier, traders used to experiment options with various methods manually based on historical data. But thanks to technological advancements, we have specialized software’s for conducting the option backtesting.

Option Backtesting is a method for determining the performance of your trading strategies and ensuring that your approach to trading is best, as you have put in real money and want to make the right choices.

So, how does the option backtesting software help the trader here? This type of Backtesting software helps traders provide data such as net profit/net loss, market exposure, fluctuations, risk-adjusted returns and many more based on the different software.

Often traders guess blindly and put their faith in hoping the strategy will work, but in the stock market, you cannot trade based on the guess works. Thus, you need to have one strong backtesting software to check the performance of your strategy and assess its suitability with your trading goal.

One reason we have seen is that you cannot win all the trades in the stock market based on your guesswork; thus, let us see why exactly backtesting matters.

Backtesting matters a lot because it helps the trader analyze and interpret the data from the past, providing statistical feedback through which you can measure the associated risk. When you know all the above details, your options trading strategy will be more efficient and profitable.

When traders conduct backtesting, and if the results are promising, they build a different level of confidence and move forward with their strategy.

Let’s move to the software’s part:

Those who are experts in Excel can perform the backtesting in excel; otherwise, we have excellent softwares available in the market.

In Excel, if you know how to use Macros options, nothing can stop you. Using the Macros option, multiple timeframe backtesting is also possible. One thing you must take care of here is you should have a heavy system, as the historical data must be enormous.

Benefits of using excel over softwares:

• If you know Macros, you can win the game
• If you have historical data in excel, backtesting is minutes away

Disadvantages of using excel over other softwares: 

• Applicable only if you are an Excel expert.
• Buying historical data can be costly.
• A high-configuration computer is needed.

You can perform backtesting and get real-time alerts for any underlying asset if you have accurate data. Another good news for those who know coding languages can conduct backtesting using the coding languages such as python. Python will not only help you backtest the strategies but will also help you in optimizing and put them on auto mode.

Advantages of using the Coding Language:

• Best for backtesting.
• It can be used on almost any type of data across the globe

The disadvantage of using the Coding language:

• You cannot start learning Coding and enter the market; it will consume much of your time.
• Any beginner or intermediate trader/coder may find it costly to use Coding languages for backtesting purposes.
  

We have seen backtesting with the help of excel and Coding; let's directly check the benefits you get using the backtesting software.

• First, every backtesting tool is itself a potent tool.
• You get in-depth detailed reports.
• You can conduct the analysis on almost any instrument you want.
• No need to learn Coding.
• You can create a wide range of queries.
• The interface is user-friendly.
• The historical data comes from a reliable source; NSE Servers
• Best Charting options with customization, perfect for professional traders and analysts.
• A simulator for Backtesting Options Strategies.
• Save every record on clouds, so you don't need to buy extra storage space.
• Live chat support.
• Get the facility of auto-trading.
• AI Stock scanning.
• Backtest your option strategy with Pine Code.
• With the Advanced portfolio backtesting tool, you can even run tests on the whole portfolio.
• Customize your Option Trading Strategies based on the backtesting results.
  

Automated backtesting software has a few disadvantages; let's check them too. Because in the stock market, you must be aware of every aspect to win the trade.

• A few softwares use only limited data and run limited queries
• Some traders find this type of softwares costly.
• You need to learn how to submit queries as it will be different in every software.
• Sometimes you get below-par level results that are not worth anything.
• Some softwares only allows limited scripts and duration, so you have to run multiple iterations to get your desired results.
  

We have seen almost every type of backtesting facility available in the market, but success does not depend on how well you can backtest. Instead, it depends on how well you can utilize the received data to develop the best option strategy.

You cannot always rely completely on the softwares and blindly follow them, no doubt they are accurate, but you also need to understand the market situation and your efficiency to close the trade at the right time. For that, you need to practice.

Here at TalkDelta, we offer a free demo to new traders, so those who are excited to know how this software work, kindly call at - 9909978783