STOCK BACKTESTING SOFTWARE

Lighthouse Trader enables you to define and backtest powerful trading strategies, with the ease of drag-and-drop.  No scripting language to learn!

A “trading strategy” is composed of three main elements.

1. One or more optional “prerequisite trigger” conditions that determine when to activate your trading strategy and when to sit on the sidelines.  For example, you can tell Lighthouse Trader to restrict your trading strategy to those periods when the
   S&P 500 index is above the 200 day moving average.  These “triggers” are simply “scan definitions” which you create using the “Scan/Rank” feature of Lighthouse Trader.  Visit the introduction to the “Scan / Rank” feature to see just how powerful these triggers can be.
   
   
2. An “entry trigger” condition that signals when to enter a new trade, either long or short.  As mentioned above, your “trigger” is simply a “scan definition” which you create using the “Scan/Rank” feature of Lighthouse Trader.  Coupled with your entry trigger is an “entry tactic” which lets you specify options such as “enter at the open on the day following the trigger day”, or “enter when price rises above yesterday’s high”, etc.
   
   
3. One or more “exit conditions”. You can combine any number of exit conditions.  For example, you could define an exit condition that exits the trade if the price moves in your favor by more than 5% in one day. This trigger may be combined with a second exit condition that will exit 50% of your position if the price rises by as much as your initial risk. Then you could add a third exit condition that exits the remainder of your position if the price has remained above the 9 period exponential moving average for at least five days and then falls back below the 20 day exponential moving average line. For each exit condition you also specify an “arming condition” that determines how to combine multiple exit conditions. Using the arming condition settings, you can specify that your exit condition only be applied in determining an initial stop-loss price.  Or you can specify that one exit condition does not become “active” until a preceding exit condition “fires”. Or you can specify that your exit condition remains “active” throughout the life of the trade.

You can also specify things such as position size, commission fees, and whether to analyze all stocks in the database or just those stocks in a watchlist you defined.

Lighthouse Trader then evaluates thousands of potential trades in a matter of seconds.  Each trade is listed in a result table containing entry price, exit price, net gain, and more.  Simply double-click on a trade to view the chart for that trade showing entry and exit points.

Extensive statistics are displayed giving you an easy-to-understand summary of the profitability of your trading strategy over the entire time range of the analysis.  Additionally, you may divide the time range into any number of smaller periods to see how consistent your trading strategy is.  Full statistics are calculated for each time period.

For the complete description of the Backtesting feature, click here.

Disclaimer

All trading simulations have inherent limitations. Simulated trading does not represent actual trading. Simulated trading systems are designed with the benefit of hindsight.They are not subject to factors such as lack of liquidity. These and other factors may cause the results of simulated trading systems to differ significantly from actual trading in the real world.

Stock Backtesting Software > Back to start