What is Backtesting Software? Backtesting software tests the effectiveness of a trading or investment strategy employed in the past and helps estimate its future performance. Also, based on the backtesting code in the software, simulation runs on a trading strategy using historical data from financial instruments like options, stocks, and more. Moreover, the returns on the model are tested across different market conditions and datasets. Additionally, institutional investors and money managers can change different trading strategy variables and compare the viability of trading strategies to select the one that works best on historical data. Also, with this, traders can get information on potential net profit/loss, market exposure, volatility, risk-adjusted return, and return without risking capital.