How-to Backtesting

Backtesting with Kite historical API

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Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with Zerodha. No affiliate commission is earned from successful completion of the procedure.

Step-by-step procedure

Per the procedure infobox.

Libraries

  • backtrader (Python): Full backtesting framework.
  • vectorbt (Python): Vectorized fast backtests.
  • Custom code: Pandas + NumPy for simple strategies.

Common pitfalls

  • Lookahead bias: Using future data in signal generation.
  • Survivorship bias: Only testing on currently-listed stocks.
  • Optimistic fills: Assuming you got the closing price always.
  • Ignoring slippage: Real fills differ from candle close.
  • Ignoring costs: Brokerage, STT, exchange fees materially affect P&L.

Walk-forward validation

Train on 60-70% of data, test on rest. Avoid over-fitting.

Risk

Past performance doesn’t guarantee future results. Backtest results are not investment advice. For complex strategies with significant capital, consult a SEBI-registered Investment Adviser.

See also

External references

References

  1. Zerodha, Kite Connect historical API, kite.trade.
  2. backtrader project, Documentation, backtrader.com.

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