I am at the point in my stock studies where I have decided I need to do some back-testing. Gulp. Problem: 1. I don't want to spend money to do it (or not alot). I am cheap; notice I still haven't paid for Bigsoccer. 2. Where to start? Is the 5/20 day MA cross-over the "standard"?? I am partial to double-bottoms on smaller-cap stocks. Any way to test that? 3. Is there a website I can use or do i need to download software? Any suggestions? 4. How reliable is backtesting? How do you know when to stop adding to your back-test? Do you put stops and everything in? Any help much appreciated. This is a whole new frontier for me. Very exciting.
I still say www.stockfetcher.com is the best. I believe they still offer a free trial, and it is cheap. As far as backtesting, I dont think anyone offers it for free. Stock fetcher is awesome, at least check it out. They have forums too to ask questions if you get confused. As far as backtesting, the longer time period you test, the better. The key is testing a strategy through up, down, sideways, and choppy markets, not just one type. That way you get a full picture of how it works. ***VERY IMPORTANT: Be careful when reading strategy books. The authors will propose a "sound" strategy and find examples that fit the strategy, leaving the reader to get a false sense of security. This little trick is called "optimization" and is the reason why 90% of the books out there are crap. The same goes for seminars, and paid for "systems" from gurus. And as far as moving averages, I am not sure what you mean by "the standard." Personally, I am not a huge fan of indicators. If you think about it, all indicators are basically a variation of price and volume. However, I like the ADX (DMI-/DMI+) to find momentum and I like to use a moving average to guage where I should put a stop loss, but not for entry, etc.
Are you sure stockfetcher has backtesting? I've been using it a little but haven't seen backtest features...
yes. I haven't used it personally for backstesting, but look on the main page. (4th link towards the right on top. ) If you cant find it let me know. It is a great sight for swing traders or investors. Intraday it doesnt offer as much..