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Here’s How Automated Portfolio Back-Testing Could Improve Your Performance

The financial world is a funny one: while we’ve all grown up hearing the old adage about history repeating itself, investment managers have to remind their clients that past performance is not indicative of future results. The reality is that neither concept is absolute and that the past can offer us an indication, which is why automated portfolio back-testing can be an extremely helpful tool.

 

What Is Portfolio Back-Testing?

Portfolio back-testing is a process by which both Systematic and Discretionary Investment Managers can check how their portfolio would have fared in a particular scenario given they had taken certain steps.

To do this, one must have the historical prices for each asset and security, as well as a good understanding how selling, buying, or holding on to securities affects market, trading, and exchange prices of those said securities.

If that sounds like a lot of work, it’s because it is: at least if you’re going to try and do it with the wrong type of software.

 

Why Opt For Automated Portfolio Back-Testing?

Everyone who is familiar with trading back-testing knows how challenging it is to back-test a portfolio: you need to synchronise multiple flows of data then apply rules to it depending on position sizing, risk, volatility, and so on.

Now, doing this with the wrong software does not do much to save you time, but through an event stream processing framework you could have a system that collects the data required, and applies your rules to it for every minute of every day you are back-testing your portfolio in: yes, every minute!

 

The Power of the Wakett Framework

Working with an event stream processing framework, like CYBMIND, which has been developed by our technical and financial experts, means that you can test your portfolio at an intraday, one-minute-level of synchronisation

In other words, you can have the portfolio and security valuations at every minute of every day.

This gives you, as an investment manager, the tools to get more accurate results, and helps you hone your strategy by showing you exactly how your portfolio would have fared in a particular situation, such as when a piece of news broke, or when an Elon Musk-Tweet sent investors into overdrive. 

And it does all this because we use the same software with the same powerful features to back-test as we use for live automated trading.

But there’s more: our software also lets you compare periodic back-tests with live results, and gives you the capability to use what it learns to your advantage by automating your decisions in such situations, ensuring quick execution in the future through automated systematic trading processes.

 

Are You Ready To Let Automated Portfolio Back-Testing Up Your Game?

For all its powerful features, CYBMIND is easy to use, can be tailored to your specific needs, and can be easily integrated into your current system. The best part is that it comes with our team of experts, who are always on hand to help maintain and upgrade it. It can also be used from a central system, aiding in your financial remote working and in your pursuit of building better connectivity in financial services.

So, what are you waiting for? Get in touch with us and give us the chance to help you excel in your trading!