One important aspect of backtesting is considering the transaction costs for more realistic results. These costs, such as commissions, funding fees, spreads, and slippage, can have an impact on profits. The position details tab in the manual backtester provides access to these transaction costs.
The Realized PnL Breakdown section lets you easily explore:
- Gross PnL
- Open and close commissions
- Funding fees
- The Net PnL
It offers a comprehensive breakdown, specifically designed to offer a clear understanding of your trading performance. The commission and funding fees data are collected every 8 hours only when the position is opened and closed. So when you see a figure like (30*0.02), it means the position was held for a total of 240 hours (30 times * 8 hours). This level of transparency allows you to understand the impact of these factors on your overall results.
The slippage breakdown section invaluable insights into the slippage experienced during your trading positions. Slippage refers to the variance between the anticipated trade price and the actual executed price. Here’s what you can expect from the slippage breakdown feature:
- The slippage breakdown provides detailed information – Including the expected price, average execution price, and the slippage itself. It is calculated as the difference between the expected price and the actual price incurred during the trade.
- The slippage section is specifically dedicated to analyzing slippage and does not include other factors like spreads and commissions. It allows you to assess the impact of slippage on your trades.
Here’s how utilizing these features can benefit your trading journey:
- Performance Evaluation:
- Realized PnL Breakdown: Analyze your trading performance by examining the breakdown of realized Profit and Loss (PnL). This section allows you to assess the contributions of different factors to your overall PnL, providing insights into the effectiveness of your strategies.
- Slippage Breakdown: Understand the impact of slippage on your trades. This section provides a detailed breakdown of slippage, enabling you to identify strengths and weaknesses in your strategies related to price variance.
- Cost Analysis:
- Realized PnL Breakdown: Evaluate the impact of commissions and funding fees on your profitability. This analysis helps you understand the cost components associated with your trades, allowing you to optimize your trading decisions and minimize expenses.
- Slippage Breakdown: Gain insights into the costs incurred due to price variance. By understanding and analyzing slippage, you can make informed adjustments to your trading approach, leading to improved cost efficiency.
- Strategy Optimization:
- Realized PnL Breakdown: Assess the effectiveness of specific strategies by examining their contribution to the realized PnL. This breakdown allows you to refine and optimize your strategies continuously for improved performance.
- Slippage Breakdown: Identify trade entry and execution accuracy by reviewing the slippage breakdown. This analysis lets you fine-tune your strategies and improve their overall performance.
- Transparency and Accountability:
- Both breakdown sections promote transparency by providing clear information about the factors influencing your trading outcomes. By understanding the impact of slippage, commissions, and funding fees, you can take accountability for their effects on your trades. This enables you to make informed decisions and better adjustments, leading to better trading results.