Backtesting is a term used in modeling to refer to testing a predictive model on historical data. Backtesting is a type of retrodiction, and a special type of cross-validation applied to previous time period(s).In a trading strategy, investment strategy, or risk modeling, backtesting seeks to estimate the performance of a strategy or model if it had been employed during a past period. This requires simulating past conditions with sufficient detail, making one limitation of backtesting the need for detailed historical data. A second limitation is the inability to model strategies that would affect historic prices. Finally, backtesting, like other modeling, is limited by potential overfitting. That is, it is often possible to find a strategy that would have worked well in the past, but will not work well in the future.[1] Despite these limitations, backtesting provides information not available when models and strategies are tested on synthetic data.

Backtesting has historically only been performed by large institutions and professional money managers due to the expense of obtaining and using detailed datasets. However, backtrading is increasingly used on a wider basis, and independent web-based backtesting platforms have emerged. Although the technique is widely used, it is prone to weaknesses.[2] Basel financial regulations require large financial institutions to backtest certain risk models.

Market Analysis and Insights: Global Backtesting Software Market
The global Backtesting Software market size is projected to reach US$ XX million by 2027, from US$ XX million in 2020, at a CAGR of XX% during 2021-2027.
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Global Backtesting Software Scope and Market Size
Backtesting Software market is segmented by company, region (country), by Type, and by Application. Players, stakeholders, and other participants in the global Backtesting Software market will be able to gain the upper hand as they use the report as a powerful resource. The segmental analysis focuses on revenue and forecast by Type and by Application in terms of revenue and forecast for the period 2016-2027.

Segment by Type
Cloud
Hybrid
On-premise

Segment by Application
Shares
Foreign Exchange
Futures
Other

By Region
North America
U.S.
Canada
Europe
Germany
France
U.K.
Italy
Russia
Nordic
Rest of Europe
Asia-Pacific
China
Japan
South Korea
Southeast Asia
India
Australia
Rest of Asia
Latin America
Mexico
Brazil
Rest of Latin America
Middle East & Africa
Turkey
Saudi Arabia
UAE
Rest of MEA

By Company
MultiCharts
Deltix
QuantHouse
SmartQuant
AlgoTrader
TradeStation Group
AmiBroker
FXCM
Wealth Lab
Axioma
Trading Blox
NinjaTrader Group
RightEdge Systems
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