Backtest

The Backtest tab lets you test your trading strategies against historical market data before risking real money. It’s one of the most powerful tools in Claxton — think of it as a flight simulator for your strategies.

What Is Backtesting?

Backtesting runs your strategy rules against past market data to see how they would have performed. If your iron condor strategy says “sell at 0.12 delta, take profit at 50%, stop loss at 200%,” the backtester will simulate every trade that would have been triggered over a date range and show you the results.

How to Run a Backtest

Step 1: Choose a Strategy Template

At the top of the Backtest tab, you’ll see a Strategy dropdown. Select one of the pre-built strategy templates:

• SPY 30DTE Iron Condor — Standard SPY iron condor with 30 days to expiration
• SPY 45DTE Iron Condor — Longer-dated SPY iron condor
• SPY 7DTE Credit Put Spread — Short-term bullish credit spread

Each template comes pre-loaded with sensible defaults that you can customize.

Step 2: Set Your Date Range

Choose a Start Date and End Date for the backtest period. A longer date range gives more data but takes longer to run.

💡 Tip: Start with at least 3-6 months of data to get meaningful results. Shorter periods may not capture different market conditions.

Step 3: Adjust Parameters (Optional)

You can customize the strategy parameters before running:

• Target Delta — How far out-of-the-money the short strikes are (lower = safer, less premium)
• DTE Range — The days-to-expiration window for entering trades
• Profit Target % — When to close for a win (e.g., 50% means close when you’ve captured half the premium)
• Stop Loss % — When to close for a loss (e.g., 200% means close when losses reach 2x the premium received)
• Max Positions — How many trades can be open at once

Step 4: Click “Run Backtest”

Hit the Run Backtest button (▶️) and wait for results. Depending on the date range, this may take a few seconds to a minute.

Reading the Results

Summary Statistics

After the backtest completes, you’ll see key performance metrics:

Equity Curve

The chart shows your cumulative P&L over time. A steadily rising curve is what you want. Look for:

• Smooth upward slope — Strategy is consistently profitable
• Sharp drops — Periods of significant loss (check what market events caused them)
• Flat periods — Times when the strategy wasn’t finding trades or was breaking even

Trade Distribution

A pie chart or bar chart showing the breakdown of wins vs. losses, helping you visualize how often the strategy wins.

Parameter Sweep

The backtest also supports parameter sweeps — testing multiple parameter combinations at once to find the optimal settings.

For example, you could sweep:

• Delta from 0.08 to 0.20 in steps of 0.02
• Profit target from 30% to 70%

The sweep will run every combination and show you which parameters performed best.

Important Things to Know

⚠️ Backtesting uses synthetic option chains. Since historical option data at the individual contract level is expensive, Claxton generates synthetic chains based on historical underlying prices and volatility. Results are approximations — real trading will differ slightly.

⚠️ Past performance doesn’t guarantee future results. A strategy that worked great in 2024 might struggle in different market conditions. Always use backtesting as one input, not the only decision factor.

💡 Tip: Run backtests across different market conditions — bull markets, bear markets, and sideways chop. A robust strategy performs reasonably in all of them.

💡 Tip: Pay attention to max drawdown as much as total P&L. A strategy that makes $5,000 but has a $4,000 drawdown is much riskier than one that makes $3,000 with a $1,000 drawdown.