Wealth-Lab Review – Is This Analysis Tool Effective?

About Wealth-Lab

Wealth-Lab is a powerful analysis software designed to help you build, backtest, and optimize trading strategies. It offers a drag-and-drop builder, so you don’t need coding experience to create a new strategy. Plus, Wealth-Lab gives you the option to design sector rotation strategies or to run multiple strategies simultaneously inside your portfolio. 

In our Wealth-Lab review, we’ll take a closer look at everything this platform is capable of and help you decide if it’s right for you.

Wealth-Lab Pricing Options

Wealth-Lab offers a monthly subscription for $39.95 per month or an annual subscription for $299.95 per year.

You can also opt for a Premium annual subscription for $399.95 per year. This includes access to all of the platform’s extensions, which offer brokerage connections and additional data feeds. Without a Premium plan, you can purchase extensions individually for $49.95 each.

Wealth-Lab offers a 14-day free trial, as well as additional 14-day trials for each individual extension.

Wealth-Lab Features

Charting

Wealth-Lab’s charting interface is highly customizable and is reminiscent of what you’ll find in dedicated trading platforms like Thinkorswim and TradeStation. You can choose from six bar types, view price data in custom intervals, and even customize the spacing between bars. Wealth-Lab also enables you to add indicators to your charts simply by dragging and dropping from a list of more than 200 options. All the key parameters for these built-in indicators can be modified, and you can code your own custom indicators using C#.

By default, charts in Wealth-Lab are static – that is, they don’t stream price data in real-time during the trading day. However, you can turn on price streaming from Yahoo! Finance with just a click.

Backtesting: Strategy Builders

The main functionality of Wealth-Lab is to help you build and backtest trading strategies. Wealth-Lab offers four different modes for building strategies to test:

Building block strategies

Wealth-Lab’s building block strategy creator is designed to eliminate coding from the backtesting process. You can drag and drop events like ‘market buy,’ ‘sell after N bars,’ and ‘sell at stop loss’ onto a design surface. Then, you can drag and drop triggers such as an indicator crossing a value or another indicator onto these events. The building block strategy creator is more than customizable enough for most strategies, and it works with any custom indicators you’ve added to Wealth-Lab.

C# coded strategies

If you want more control over your strategy, you can turn to Wealth-Lab’s C# code editor. The platform has a quick-reference library for C# that you can keep open alongside the editor, which is helpful when writing code from scratch.

Rotation strategies

The rotation strategy builder enables you to define a strategy that rotates in and out of positions based on a weighting factor, such as an oscillating indicator. You can choose the maximum number of positions to hold at any time and how much weight to give to the weighting factor.

Meta strategies

Meta strategies can incorporate multiple building block, C# coded, and rotation strategies simultaneously. You can choose how much weight each strategy should be given in your overall portfolio.

For all strategy builders, you can select settings like what symbols to include in the backtest, how much to commit to each position, and the maximum allowable drawdown for your portfolio.

Backtesting: Results

Wealth-Lab offers a number of different ways to analyze the results of a strategy backtest. You can view trade results by symbol, plot the distribution of profits by trade, and see your drawdown over the course of the test period. You can also plot a graph of your portfolio value over the test period and view a table or chart of your monthly returns. 

Of course, Wealth-Lab also lets you see a log of all trades so you can see exactly what happened during the backtest. You can also pull up an annotated chart for any symbol that was included in your test to view entry and exit points.

Backtesting: Optimization

One of the best things about Wealth-Lab is that it gives you tools to optimize your strategy. In the building blocks strategy builder, you have the option to make any indicator optimizable. So, for example, when using an RSI crossover to define a strategy, Wealth-Lab can simulate multiple crossover thresholds to see which yields the greatest profit or lowest drawdown.

The parameters underlying each indicator are also optimizable. So, you could step through the number of bars used to calculate RSI as well as the crossover threshold used for your strategy.

Automated Trading

Wealth-Lab can connect with brokers like TD Ameritrade, Interactive Brokers, and Alpaca, as well as with cryptocurrency exchanges like Kraken (these integrations require extensions). Once you have an optimized strategy, you can use Wealth-Lab to automatically trade with these platforms. Wealth-Lab gives you the option to stage trades triggered by your strategy or to actually execute them on your behalf.

Wealth-Lab Customization and Layout

Wealth-Lab is designed as a desktop app and does not have web or mobile interfaces. The platform uses streaming price data from Yahoo! Finance by default, but you can connect additional data feeds using the available brokerage extensions.

In addition, Wealth-Lab offers its own datasets for the major US and global indices, which account for changes in the symbols covered by these indices over time. However, you’re also free to create your own custom datasets to use for backtesting.

Wealth-Lab’s interface can be messy and is best-suited for use on a large monitor or multiple monitors. Helpfully, you can save workspace layouts as defaults to quickly return to them in the future.

Platform Differentiators

Wealth-Lab is a powerful and highly customizable platform for building, testing, and optimizing trading strategies. The platform stands out in several respects.

First, the availability of multiple strategy building modes is both unique and very useful. The building block editor enables you to create strategies for testing without coding, while the meta strategy builder lets you test outcomes when applying multiple strategies simultaneously within your portfolio.

Second, Wealth-Lab’s optimization features are very advanced. The ability to optimize multiple parameters in a single strategy run gives you a lot of flexibility to see how different pieces of your strategy interact with one another. Plus, Wealth-Lab enables you to easily optimize the underlying parameters used in indicator calculations without requiring you to code new indicators from scratch.

Finally, Wealth-Lab goes beyond simply developing and testing to offer automated trading. While the number of brokerage extensions is limited, the fact that automated trading is supported at all is a significant plus for this platform.

What Type of Trader is Wealth-Lab Best For?

Wealth-Lab is best for experienced traders who want to develop custom strategies. The platform is designed to be usable by traders who don’t have coding experience, although you’ll unlock more potential if you’re comfortable coding in C#. Wealth-Lab is especially good for traders who want to combine multiple strategies or use a rotation strategy, since few other backtesting software platforms allow for these options.

One thing to keep in mind is that Wealth-Lab is only compatible with TD Ameritrade, Interactive Brokers, Alpaca, and Kraken for auto-trading.

Pros

• Drag-and-drop strategy builder with no coding
• Detailed optimization options
• Test multiple strategies running simultaneously
• Auto-trading with TD Ameritrade, Interactive Brokers, Alpaca, and Kraken
• Includes dynamic datasets for all major US and global indices

Cons

• Limited brokerage compatibility
• Custom indicators must be coded in C#