Getting Started with Simulations

What a simulation is

A Simulation is a paper portfolio run with virtual money. It takes one of your strategies and follows it forward, day by day, through the market as it actually moves. On every rebalance day it applies the strategy's rules, schedules the trades those rules call for, and records what happens to the portfolio after they run.

It sits between two things you may already know:

That middle position is the point. A backtest can be tuned until history looks good; a simulation can't, because the future hasn't been seen yet.

When to start one

Start a simulation once you have a strategy whose backtest you have actually read: its risk as well as its return, and the Key takeaway's caveats. A simulation is the next test of that strategy, not a substitute for the first one.

It is also the way to get used to a strategy's rhythm before you act on it anywhere else: how often it trades, what its sells look like, how it feels to hold through a bad week.

Starting a simulation

There are two ways in:

• Start Simulation, on a strategy's results page or in its card menu on My Strategies. It opens a short dialog for that strategy.
• Create Simulation, on the Simulations page (or Create a Simulation on the Dashboard). It opens a larger window that first asks which of your strategies to use, then shows the same fields.

The simulation copies the strategy's settings as they are when you press Start Simulation. Changing the strategy later does not change a simulation that is already running; a simulation has its own settings from then on.

What happens next

A simulation's first days

1. SubmittedIt starts on the date you chose; results appear after that day's market update
2. Not started yetOpening it early shows Simulation hasn't started yet, and its values show — until the first valuation
3. First batch: all buysIt starts in cash, so it buys every holding the strategy targets, at that day's close
4. Later batches: only changesSells of holdings that leave the rules, and buys to replace them

After you press Start, NiveshBuddy confirms it in one line, "Simulation submitted. It starts on {date}, and results appear after that day's market update.", and takes you to the Simulations page. The new simulation is listed there with its rebalance frequency and next rebalance date. Its figures fill in once it has been valued for the first time.

For a hypothetical demo, Balanced Momentum Simulation was submitted on 12 October, too late in the day to start that day, so its start date became the next trading day, 13 October. Its first activity reads "15 buys — fill on first trading day": one buy for every holding of a fifteen-stock strategy. What those trades are, and the one decision you can make about them, is covered in the guide to scheduled trades.

Credits, pausing and stopping

The Simulations page can filter by Active, Paused, Stopped and Completed, and sort by date, name or return. There is no way to copy a simulation: to run the same strategy again from a new date, start a new one.

Using it well

Let a simulation run for several rebalances before you judge it. Its first days are dominated by the first batch of buys and a few days of price moves, which say very little about the strategy. The two demo simulations above were both slightly down after their first three days; that is a fact about three days, not about the rules.

Change it as rarely as you can. Each time you step in, the record shows a little less of what the strategy would have done on its own.

And keep the boundary clear. A simulation tells you how your rules are behaving. Whether to act on them in your own account, and how, remains your decision.

Common questions

Key takeaways