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Backtest

UPDATED 2026-08-01

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A backtest is a historical simulation that replays a strategy's rules over past market data to show what it would have done. It applies the strategy's own allocation, rebalancing, and exit rules step by step across history and produces an equity curve plus performance metrics. In Fincanva, "backtest" means this historical simulation for every strategy type — there is no separate "backtest" kind of strategy.

Also seen as: Run, Re-run

What does a backtest measure?

A backtest measures what a strategy's own rules would have produced over historical market data, reported as an equity curve plus the metrics that summarise it — CAGR, Max drawdown, Sharpe ratio and the rest of the metrics view.

It measures the whole path, not only the end point: two strategies can finish at the same value having taken very different routes there, and the curve is what shows the difference. What it does not measure is anything outside the rules you saved — it makes no judgement about whether a strategy is suitable for you, and it says nothing about periods the chosen instruments have no data for. See How backtesting works for the step-by-step mechanics.

Defaults in Fincanva

A backtest runs from the earliest year your chosen instruments and plan allow, through the latest available market close; its end date follows the newest data, not today's calendar date.
Results are cached and refresh daily as new market data arrives, so the same strategy's numbers can shift from one day to the next with no change to its settings.
Identical strategies share one computed result, so a backtest may already be running because someone else requested the same configuration.
Saving and running is the reliable way to (re)compute today — it applies your latest settings and starts a fresh run.

Worked example

A two-asset strategy holds 60% in a stock ETP and 40% in a bond ETP, rebalancing back to 60/40 twice a year. The backtest starts both sleeves from the same capital and replays every trading day; at each rebalance date it trims whichever sleeve has grown past its target and tops the other back up to weight. After two rebalances, the equity curve reflects both the market's moves and the two corrections back to 60/40, and the metrics summarise that whole path. See how a backtest works for the step-by-step mechanics.

A backtest describes what a strategy's rules would have done on historical data, not what they will do, and past results are never a promise of future ones. Fincanva provides no financial advice — see Is this financial advice?.

Where this term is used

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The pages that reference this term — so a term page is somewhere you pass through, not somewhere you land and stop.

What the Fincanva score is and how to read it

Analysis · The Fincanva score is a normalized, Beta-badged 0–5 quality score for your backtest, shown on a gauge with a Strong, Fair or Weak tier; here is how to read it.

What every number on the metrics page means

Analysis · The metrics page reports your backtest's return, drawdown, volatility and monthly figures; this guide explains each row, its convention and its glossary term.

Reading the monthly returns heatmap (and the NP/DD column)

Analysis · The monthly returns heatmap shows each month's return by year with Total, DD and NP/DD columns; this guide reads the grid and the costs/taxes/reinvest toggles.

How backtesting works

Backtesting · A backtest replays your strategy's rules across real market history to produce an equity curve and the metrics that summarise it: evidence, not a forecast.

Is this financial advice?

Investing theory · No — Fincanva is a research and simulation tool and gives no financial or investment advice; backtests show what would have happened, not what will.

The nine biases Fincanva helps you avoid

Getting started · The nine research biases that distort backtests — look-ahead, survivorship, overfitting and more — and the Fincanva behavior that reduces each one.

Get started with Fincanva in five steps

Getting started · Create your first strategy, pick a strategy type, complete the guided stepper, run a backtest and read the result — the five steps on a new account.

The Fincanva loop

Getting started · The Fincanva loop is the product's core workflow: build a strategy, backtest it on real market history, analyze the result, then refine and go round again.

What is Fincanva, and what can you do with it?

Getting started · Fincanva is a research and simulation tool: a strategy-building and backtesting platform where you build, combine, screen, backtest, and analyze strategies.

Choosing the instruments your strategy holds

Strategies · Choose the instruments a Fincanva strategy holds: search and add symbols or lists, scope by asset class, and read the Delisted and Not tradable badges.

Create a strategy and choose its instruments

Strategies · Create a Fincanva strategy: pick a strategy type, then complete the guided stepper — assets, risk, allocation, exit rules — and save it to backtest.

Editing a strategy: the settings cards

Strategies · Edit an existing strategy in its Settings — change Strategy type, Asset selection, Rebalance, Risk, Allocation, or Position exits, then re-run a backtest.

Guided mode and the Full editor: two ways to edit the same strategy

Strategies · Guided mode and the Full editor edit the same Fincanva strategy: one walks you through it step by step, the other puts every settings card on a single page.

Invested capital and cash reserve: how much is put to work

Strategies · The invested portion sets how much of a combined strategy's capital is put to work versus held as a cash reserve, from fully invested down to lightly invested.

Position exits: take profit, stop loss, max hold, and reinvest delay

Strategies · The four position-exit controls — Take profit, Stop loss, Max hold, and Reinvest delay — where each one lives, its range, default, and how the toggles work.

How often your strategy rebalances

Strategies · The rebalance frequency is your strategy's master clock: pick 1, 3, 6, 12, 18, or 24 months with Rebalance every, and it sets how often a backtest re-checks.

Saving, running, and copying a strategy

Strategies · Save persists your changes and Backtest runs the saved strategy; Duplicate copies your own, Copy to Mine unlocks a Public one. No version history yet.

Choosing a strategy type: what each of the four changes

Strategies · Fincanva's four strategy types — Single instrument, Multiple instruments, Screener and Full setup — shape the guided build and what a strategy can hold.

What is a strategy in Fincanva?

Strategies · A strategy in Fincanva is a saved, reusable set of instruments plus allocation and exit rules that you backtest and follow over time on real market data.

Also referenced by 130 terms

AAGR Account deletion Allocation and allocation method Allocations chart Annualization Asset-selection modes Average pain Bankruptcy rules Benchmark Best month and worst month Beta Neutral CAGR Calculation window Capital Capital chart Capital-gains tax Cash % and capital invested Chart toggles Cherry-picking bias Combined Strategy analytics Compute time Condition types Confirmation bias Duplicate and Copy to Mine Correlation matrix Cost-ignoring bias Costs toggle Coverage window Daily warm of Live strategies Data freshness and frontier Data-quality bias Data-snooping bias Data-tier gating Delisted Direction: Long-only, Long + Short, Short-only Dividend tax Dividends and splits Max drawdown Equal Weights Equity curve Excess return Execution time Exit reason Filter condition anatomy Fin Fin suggestions Fixed Weights Floating Full editor Fundamental metric columns Gross vs net Guided mode Holding horizon Holdings Holdings forced assumptions Incomplete Combined Index lists and point-in-time constituents Instrument Interest-rate markups Inverse Volatility Invested portion Leverage Longest drawdown Longest recovery Look-ahead bias Mark Live Market Cap Weighted Market-day and trading-calendar alignment Matches Max hold months Max-symbols cap Metrics table Min Correlation Modern Portfolio Theory Monthly and yearly average Months matrix Overfitting Permanent instrument identifier Plan compliance Positions detail drill-down Positions summary table Positive months Precomputed toggle variants Reinvest profits Return-to-drawdown ratio Return windows Risk-free rate Risk-Off canonicalization Risk-On and Risk-Off Risk Parity Rolling correlation Run status Screener Screener attach Screener backtest Screener-backtest benchmark Screener execution and caching Seed universe Selection bias Sequential filtering and Top-N ranking Shared compute Sharpe ratio Simulation assumptions Simulation engine Simulation start year Slippage Special data series Start-date sensitivity Starting capital Stop loss Strategy Strategy alerts Strategy in a Combined Strategy type Survivorship bias SymbolsList Take profit Target notional Tax residency Taxes toggle To do, To fix, To update Total P&L Total return Transaction cost Universe Universe facets Volatility Walk-forward replay Whipsaw

Deep diveHow backtesting works · What is a strategy in Fincanva? · Is this financial advice?

CompareBenchmark · Simulation engine · Equity curve · CAGR · Max drawdown · Sharpe ratio

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Fincanva provides no financial advice. Backtests show what would have happened — not what will.

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