How it works
This page explains, step by step, how the Backtester turns a portfolio you describe into a full performance report. At a high level, you describe a portfolio and a set of rules, and the tool walks forward through historical daily prices one day at a time, simulating exactly what your strategy would have done. The Backtester is available to Free, Pro Lite, and Pro accounts.
What it shows
The simulation runs through the stages described in the following sections, in order. Each stage feeds the next, and the final stage assembles the report.
Assemble the basket
Tickers come from your typed list, a portfolio, a model portfolio, or a merge of portfolios. Each holding gets a target weight, either equal or your custom percentages. For the source options and weighting, see Inputs and settings.
Buy in at the start date
Starting capital is allocated to the target weights using historical prices on the start date. If a holding has no price history yet at the start, the remaining weights are normalized so all capital is still invested, and this is recorded in the Process log.
March through time
For each trading day, the value of every holding is updated from that day's historical price. This produces the daily portfolio value, daily return, cumulative return, and drawdown that feed the charts.
Handle dividends
When a holding pays a dividend, it is either reinvested into more shares (when reinvestment is on) or set aside as cash (when off, with an optional tax applied). Stock splits are handled so share counts stay consistent.
Rebalance on schedule
At the chosen frequency, the portfolio is brought back toward its target. In Static mode, that means restoring the original weights. In Dynamic mode, it means re-ranking holdings by the chosen metric and holding the top names. The Drift method rebalances only when weights have wandered past the tolerance band. Each rebalance generates trades, and trading costs (commission and slippage) are charged at execution.
Compare to the benchmark
The same starting capital is tracked in the benchmark ticker over the identical period, producing the comparison lines and statistics. For the full comparison, see Benchmark comparison.
Summarize
Once the walk reaches the end date, every return, risk, drawdown, dividend, cost, and attribution figure is computed from the day-by-day record, and the full report is assembled. For the figures, see Results and metrics.
Data and timing
The strategy ranking metrics in Dynamic mode (PE, PB, PEGY, cash-adjusted PEGY, dividend yield, EPS) draw on fundamental and price data from AlphaVantage, with quotes delivered through AlphaVantage from Nasdaq. The simulation walks through end-of-day historical prices, refreshed daily after the close.
The math shown to you on your own simulated portfolio (returns, drawdowns, volatility, dividend income, and the benchmark comparison) uses standard, transparent finance formulas, many of which appear in the in-app information tooltips and in Results and metrics. The Backtester is a simulation of standard portfolio mechanics. It does not use any proprietary GNG rating or valuation model to drive the simulation itself.
Use cases
- Understand exactly what the tool does on each historical day before trusting a result.
- See why a holding contributes only from the point its data begins, and why the Process log flags a normalized weight.
- Decide whether to use Calendar or Drift rebalancing once you know how each fires.
Limitations and disclosures
A backtest reconstructs the past for a portfolio you describe. It is not a prediction, and past performance does not guarantee future results. A holding contributes only from the point its historical data begins. When a name lacks early history, the tool normalizes weights for that stretch and flags it in the Process log, so for a clean full-period test, start the run when all holdings have data. The simulation uses end-of-day prices and the cost assumptions you set. It does not model intraday execution, real order fills, or market impact beyond the slippage you provide.
GNG Research provides equity research and educational tools, not investment advice. Nothing on the platform is a recommendation to buy or sell any security. Do your own research and consider your circumstances before making any investment decision.