How to Backtest a Trading Strategy with Python and EODHD API

Most backtests lie to you. Not intentionally. But they lie. You design a strategy, run it on historical data, and watch the returns look incredible. Then you run it live — and it underperforms a simple buy-and-hold from day one. The math wasn't wrong. The data was. If you're: testing momentum or mean-reversion strategies in Python, building quant tools for personal or professional use, or tired of backtests that collapse the moment real execution begins, This changes how you work. TL;DR What this covers: Backtesting trading strategies in Python using EODHD's historical OHLCV data API Stack: requests , pandas , numpy — no heavy frameworks (no backtrader, no vectorbt) Scripts included: Script 1 — Fetch adjusted historical price data from EODHD Script 2 — SMA crossover strategy (20/50-day) Script 3 — RSI mean-reversion strategy Script 4 — Performance metrics: Sharpe ratio, max drawdown, win rate EODHD pricing: Free tier available; full access from $19.99/month Best for: Developers and analysts who need reliable, split/dividend-adjusted data without scraping The Problem with Free Data Most developers start with Yahoo Finance or a scraped CSV. That works fine for a quick prototype. It stops working the moment your strategy includes anything that happened around a stock split, dividend payment, or ticker change. Non-adjusted price data creates ghost signals. A stock "drops 50%" when it actually split 2:1. Your moving average calculates a crossover that never happened in real life. Your strategy looks profitable because it's trading on a data artifact. The free path costs you accuracy. And in backtesting, accuracy is the whole point. The Fix Is Simpler Than You Think The real bottleneck isn't the strategy logic. It's the data source. Use split- and dividend-adjusted closing prices from a reliable provider, and half your backtest reliability problems disappear before you write a single signal. EODHD APIs provides exactly this. Their historical data endpoint returns adjusted