Adrian Reid explains why Excel is a poor choice for backtesting trading rules. While Excel can technically import stock data and run calculations, it forces you to build everything from scratch. Dedicated platforms like Amibroker and RealTest handle backtesting, reports, and charts automatically.
Next thing people often ask me about is Excel backtesting. Can I backtest my trading rules and ideas in Excel? And yes, the answer is you can. And there's APIs to get stock data coming into Excel and that can work effectively. The trouble is Excel is just not built to be a backtesting engine. So you're gonna have to create all the formulas yourself or find templates from the web and you'll have to do all of that analysis on your own. Compare that to say, Amibroker or RealTest where all of the backtesting protocols are built in, the reports are built in, all of their output charts are built in, the analysis is just so much easier. So I would prefer to choose a system which, or software which is fit for purpose, designed for that purpose. Yes, you can make Excel do pretty much anything with numbers. Does that mean you should? I don't think so. I would much rather choose Amibroker or RealTest any day of the week because they're just built for backtesting. Excel is built to do anything with numbers. It's far too generic a tool. So Excel backtesting, eh, free, but not really optimal.
