EzBacktest

Backtesting can be applied to any historical data, but it’s particularly useful in finance. Backtesting can use historical data to predict how a particular strategy might have fared under certain conditions so analysts can learn from the mistakes of the past. EzBacktest is a free financial tool that can verify and back-test virtually any stocks or funds, individually or in combination. You can compare your results to major stock indexes, change your allocation scheme, and run the data again. EzBacktest lets you load up on risk or reduce your position at will, and its graphical displays make the data easy to grasp. EzBacktest’s user interface is simple to figure out: whether you start with the menu bar or the main window, New Portfolio is the obvious first step. Creating our first portfolio involved giving it a name and adding stocks and allocations. It’s totally easy (and even fun) to do: type in the stock’s abbreviation in the Ticker box, percentage of allocation in the Percent box, and add a note, if you want to. We started simple with a well-known blue chip. We selected Months to test (two is the minimum) and then chose a Rebalance rule from a drop-down list. Clicking the Back Test button (you can also press a Play button) produced results much more quickly than we expected. EzBacktest displayed colorful graphical data in a pop-up. We could select Show index line, Show Legend, and Show declines, and a table displayed summary data. Clicking Export Image let us save the graph as a JPEG. Our random selections turned out pretty well, outperforming the S&P 500 by 1.09 percent for a 4.90 percent gain over 72 months. Now all we need is a time machine… Of course, the real value of EzBacktest isn’t seeing how well hindsight works for you in the past (good luck with that) but to apply the lessons of the past to today’s decisions about the future. To that end, EzBacktest is easy to use, fast, and (best of all) free. It’s fun to play around with, too, if you like that sort of thing. We do!