Term
BacktestingIntermediate
ENIT

Simulation assumptions

UPDATED 2026-10-06

Simulation assumptions are the three modelling choices applied to every backtest — Costs & interests, Taxes and Reinvest profits — that decide whether results include trading costs and financing, whether tax is deducted, and whether profits compound.

Also seen as: backtest assumptions

How does Fincanva handle it?

  • They live in the bar at the bottom of every page you open for a strategy, behind the sliders button, which shows how many of the three are on (for example 2/3); it opens a panel titled Simulation assumptions. The word "Assumptions" is no longer a navigation label — this group carries the name.
  • Costs & interests covers trading costs, financing and interest; Taxes covers tax on dividends and realized capital gains; Reinvest profits compounds realized profits.
  • By default a backtest is shown with Costs & interests and Taxes off and Reinvest profits on — gross of costs and tax, with profits compounding.
  • Reinvest profits also decides which annualized-return metric appears: on shows CAGR (geometric), off shows AAGR (arithmetic).
  • The three govern the Analysis views. The Positions view ignores them and always reads the gross, fully-reinvested version, which is why the two can show different numbers.

What does it look like in practice?

A strategy is showing a gross return with Taxes off. You flip Taxes on: the displayed return, its annualized figure and the monthly numbers all drop to their after-tax values immediately, because that variant was pre-computed at the last backtest — no new backtest starts. What persists is everything you didn't touch: the backtest itself, the strategy's settings and your saved tax rates are unchanged, so flipping Taxes back off restores the gross view instantly. Editing a tax rate in Settings is the opposite kind of change — that is persisted, and the strategy must re-run before the new rate shows up.

Switching an assumption changes what a past backtest is reported to have produced, not what a strategy will produce.

Which changes are instant, and which need a re-run?

The three toggles and the rates behind them behave differently, which is the key to reading them:

  • Instant — the toggles. Flipping Costs & interests, Taxes or Reinvest profits switches what you see immediately, with no new backtest. Fincanva computes every combination when the strategy runs, so a toggle just reads the matching already-computed variant.
  • Saved — the rates. The values behind the toggles — your cost and interest assumptions, and your tax rates and regime — are saved in Settings. Changing a rate is a settings change: the strategy reads Needs re-run, and the rate takes effect only after it re-runs.
Used in 29 pages

Fincanva is for education and illustration only. It is not personalised financial advice, and past or simulated results do not predict future ones. Read the Terms Addendum

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