The article “How to Use Python for Backtesting?” was originally published on IBridgePy blog.
Backtesting is mainly used by traders in order to test trading strategies. There are many trading strategies that people like to use. However, before they put in any effort to execute the strategy it is important to ensure it’s security. This helps traders to avoid loss. It also helps them to save time and energy. Backtesting is simply done by using the data from previous trading strategies to make future predictions about new strategies. Judging by the way certain elements from past strategies worked, traders can predict the success or failure of a new similar strategy. They then use this information to make decisions. If a backtest is successful, then traders go ahead with the strategy.
Python is simply the language that is used by computer programmers. Many websites and softwares and made using python. Lots of automations and analysis is also done on various websites and programmes with the help of python. Python is not limited to only a particular niche but many people can use it for creating different types of websites.
Python can be used for backtesting. Backtesting can be made easier with the help of python.
Backtesting in python has helped traders to utilise new and advanced technology to speed up the process of backtesting.
There are many different backtesting libraries and advanced Python platforms that you can use to backtest your strategies. There are many different options available and you need to choose the best one for optimum results. A few things to consider when choosing a Python backtesting platform are speed, accuracy, maturity, and flexibility. You should also make sure that the platform you choose is easy to use.
How to use Python for backtesting:
Here are a few general steps in which people use Python for backtesting:
- Install your backtesting platform.
- Import your trading strategy
- Enter all necessary data related to your strategy.
- Optimize the data
- Run the backtest
Although the above steps seem simple, they can be quite alien to someone who is not familiar with how coding works. Hence, it is recommended to take the assistance of a professional coder or computer programmer and ask them to run your backtest. However, if you do know how to run these backtests but need an easy-to-use and simple platform, then ibridgepy is the one for you.
You can click on the link and visit their website to know more about their features.
The author of this article is not affiliated with Interactive Brokers. This software is in no way affiliated, endorsed, or approved by Interactive Brokers or any of its affiliates. It comes with absolutely no warranty and should not be used in actual trading unless the user can read and understand the source. The IBKR API team does not support this software.
Disclosure: Interactive Brokers Third Party
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from IBridgePy and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBridgePy and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: API Examples Discussed
Throughout the lesson, please keep in mind that the examples discussed are purely for technical demonstration purposes, and do not constitute investment advice, an investment recommendation or investment research. Also, it is important to remember that placing trades in a paper account is recommended before any live trading.
Join The Conversation
If you have a general question, it may already be covered in our FAQs page. go to: IBKR Ireland FAQs or IBKR U.K. FAQs. If you have an account-specific question or concern, please reach out to Client Services: IBKR Ireland or IBKR U.K..
Visit IBKR U.K. Open an IBKR U.K. Account