TradersStudio would show you bought the stock at $8.00 and the current price is $4.00 and had a 2 for 1 split and your profit is zero. At the session level the advantage is better reporting, for example you can see how much money you made buying 100 shares of each stock in dollars accurately. Also you can see in dollars dividends accurately. The big advantage comes in the tradeplan level. 1) Split adjusted analysis requires you buy the same dollar amount of each stock. First that is impossible, let's support we are buying Intel and Google and want to buy 1000.00 of each. Intell will not be exactly a integer number of shares and google will be even worst. you are buying 2.87 shares, in real world you can only buy 2. You then compound these errors with money management. 2) A percent risk stategy based on technical analysis can not be done with split adjusted analysis only. If we want to risk to a 10 day low, not just 10%, split adjusted analysis does not work. Let's use google as an example current price is 347.80 a share, let's suppose for example we have a buy signal but this system we can put a stop at 346.00 a share. The other stock we are buying is AIG. We buy at 1.08 and need to risk to the old low at .38 a share. In this case if our rules are we can buy up to 10,000 of each stock but can't risk more than 1,000 on each stock, we can only spend $1542.00 on AIG but the full 10,000 on google. If we do this we can't do our analysis on a portfiolo using split adjusted numbers. 3) Another advantage is we can filter stocks for example only allow trades if the stock is over 5.00. These are just a few points why our analysis method is the correct way to do stock based backtesting.
In my example there were two 2-for-1 splits, so I'm assuming the current price would be $2. Regardless, my confusion about Traderstudio's process is ebbing a little. It seems you use two data sets, one for money management and another for calculating buy and sell signals. Is my guess right?
Yes in your case the price would be $2 in your example. We calculate buy sell signals using split adjusted data and the scale them to raw prices and adjust all calculations for splits. Another issue is if we have a breakout system which buys a 1 year high, question is do you include dividends or not in that price to decide the breakout, in tradersstudio you can do it either way with only calling one additional function.