Adrian Reid explains why beginners should backtest with price and volume first, then add fundamental data once they understand the basics. Five years ago fundamental backtesting was expensive and rare; now platforms like Portfolio 1, 2, 3 make it accessible, but you need complete historical data and the right tools to do it right.
What about fundamentals in backtests? Almost no one talks about them. Might be useful to include them. Yes, absolutely, if you can get them. It's getting easier too. It is now possible to back test with fundamental data with certain online platforms. Portfolio 1, 2, 3 is an example. You can back test with fundamental data in portfolio 1, 2, 3, but five years ago that sort of thing didn't really exist, certainly not at a sensible price for a retail trader. You don't need fundamentals to be profitable though, so I wouldn't let that be a barrier. It's much easier to back test with technicals only price and volume and I've traded for 25 years using only technical based systems, price and volume based systems, so that definitely works. If you want to incorporate some fundamentals, you've just got to make sure that you've got a all of the historical fundamentals and a platform that allows you to back test it. So portfolio 1, 2, 3 is one of those. I wouldn't start there though. If you haven't gone down the whole backtesting journey. I think I would start with a technical based system, a simple trend following mean reversion based on price and volume movements because you'll find it much easier to learn and then go and apply your knowledge to backtesting with fundamentals.
Sa.
