Backtesting also known as Systems Testing is the concept of taking a strategy and going back in time to see what would have happened if the strategy had been faithfully followed. The assumption is that if the strategy has worked previously, it has a good but not certain chance of working again in the future and conversely if the concept has not worked well in the past, it probably won't work well in the future.

As an example, you may decide that you want to try a Moving Average crossover such as the 8 day average crossing a 13 day average. Enter when the 8 day crosses up through the 13 day and cross down when the day average crosses back down through the 13 day as shown on the following chart:

The 8-13 moving average crossover looks great for the above chart but how would you go about deciding if this strategy is still a good idea across the entire market? Other than taking all trades that qualify and tallying the results for the next several weeks, the only way to decide if the approach is viable is to test it using historical data. This is exactly what TC-Companion does.

TC-Companion is the only Backtesting tool on the market written specifically to work with TCNET and TC2000 and use the same syntax as Worden Brother's Personal Criteria Formula or PCFs. In fact you can import your TCNET/TC2000 PCFs directly into TC-Companion for testing.

At the end of this section, we'll tell you what the 8-13 moving average crossover would have done from Jan 1st through March 24th of this year using the S&P 500 Watchlist.