Should I use regular or adjusted close for backtesting?
You would have to compare your backtesting to what you will be doing in real trading, and try to have the backtesting as close to your real trading as possible. Note: you may never get the backtesting to match your real trading exactly but you need to get as close as possible. The whole purpose of backtesting is to check if your trading strategies - your signals, entries and exits, and your stops - are profitable over various market conditions. As you would be using actual closes to do your real trading you should be using this to also do your backtesting. Rather than using adjusted data to get an idea of your total return from your backtesting, you can always add the value of the dividends and other corporate actions to the results from using the actual data. You may even find a way to add any dividends and other corporate action to your results automatically, i.e. any dividend amount added to your total return if the stock is held during the ex-dividend date. If you are using adjusted data in your backtesting this may affect any stops you have placed, i.e. it may cause your stop to be triggered earlier or later than in real trading. So you will need to determine how you will treat your stops in real trading.  Will you adjust them when there is corporate action such as dividends?  Or will you leave them constant until actual prices have gone up? If you will be leaving your stops constant then you should definitely be using actual data in your backtesting to better match your real trading. A one year period of study - Stock A trades at $100, and doesn't increase in value, but has $10 in dividends over the period.  Stock B starts at $100, no dividend, and ends at $105. However you account for this, it would be incorrect to ignore stock A's 10% return over the period.  To flip to a real example, MoneyChimp shows the S&P return from Jan 1980 to Dec 2012 as +3264% yet, the index only rose from 107.94 to 1426.19 or +1221%.  The error expands with greater time and larger dividends involved, a good analysis won't ignore any dividends or splits. If you want to monitor how well you did in choosing your investments you will want to use stock prices that account for the dividends and splits and other changes (not just the closing price).  The adjusted close will include these changes where the straight close will not include them.  Using the adjusted close you will get your true percentage change.  For example I have a stock called PETS that paid an $0.18 dividend in July 2015. The adjusted closes before that day in July are all $0.18 lower per share.  Say the closing price had been unchanged at $20.00.  The close prices would say I made no profit, but the adjusted closing price would say I made $0.18 per share on this investment because the adjusted close would read $19.82 in June 2015 but would read $20.00 in August 2015 (just like the closing price).  The adjusted close allows me to know my true profit per share.
So for quarters So, if Q1's value was 10 and Q2's value was 25 For closing or opening prices, I would use closing prices.  For instance, some used Adjusted Close or Close on Yahoo Finance (see this example of AAPL). Added Note: In your example, for your example, you'll want to take the absolute value of the denominator (aka: divisor), so an Excel formula might look like the below example ... ... where the new and old are cells. "&gt;No, virtually ever item in the CPI is adjusted using hedonics, which by definition can only be used to lower inflation, not adjust it up.  Wow. Just wow.  Let's analyze this:  &gt;virtually ever item in the CPI is adjusted using hedonics  How does one apply hedonics to energy? There are so many items in the CPI basket for which this does not even make sense I don't know where to begin with such a blanket statement. [Here is how the BLS computes CPI](http://www.bls.gov/cpi/cpifaq.htm#Question_6). Note the categories, and that they currently track hundreds of goods in each of about 200 categories, totaling tens of thousands of goods. With a little digging you can find the weighting. [Here is the list of what they apply hedonic weights to](http://www.bls.gov/cpi/cpihqaitem.htm). It is a vastly smaller subset of all goods tracked, and the weightings makes them not affect overall CPI much *at all*. All the precise methodologies are listed on the BLS site, and you can track it all down. As stated below, someone has done the analysis (and there is a PDF on the site) and they obtained that incuding hedonic items affects inflation only by 0.005 percent per year.   &gt;which by definition can only be used to lower inflation  By your definition? The actual definition does not force either direction. In reality it adjusts up and down as clearly shown in BLS reports, which I'll link below.   &gt;, not adjust it up.  As I'll list below, it in fact does go both ways.  Finally, analysis of hedonics seems to indicate it has a miniscule effect on inflation rates, again papers are cited in the link shown below.  [Critics often incorrectly assume that BLS only adjusts for quality increases, not for decreases, and that hedonic adjustments have a large downward impact on the CPI. On the contrary, BLS has used hedonic models in the CPI shelter and apparel components for roughly two decades, and on average hedonic adjustments usually increase the rate of change of those indexes. Since 1998, hedonic models have been introduced in several other components, mostly consumer durables such as personal computers and televisions, but these newer areas have a combined weight of only about one percent in the CPI. A recent article by BLS economists estimated that the hedonic models currently used in the CPI outside of the shelter and apparel areas have increased the annual rate of change of the All Items CPI, but by only about 0.005 percent per year.](http://www.bls.gov/cpi/cpiqa.htm#Question_4).  &gt;inflation represents how the value of the dollar has accrued vs the value of a 20"" TV, which is what the definition of inflation is.  No, inflation must measure the price *of the same good* over time. When some goods are no longer available, other goods must be investigated to provide continuity in the comparisons. Otherwise you'll have me comparing the price of a horse to the price of a car since they both provide transportation, yet over time one replaces the other, and direct comparisons on $ alone does not accurately measure what one gets for their money.  You cannot compare the cost of different goods purely on price alone and call that inflation.  &gt;So, no, I don't think you're correct on this.  Well, [since other places that track inflation](http://bpp.mit.edu/) arrive at very similar results using different methodologies, and a vastly larger pool of goods I think that you overstate that the changes did not increase accuracy of inflation measurement.  &gt;This is also kind of glossing over the fact that the CPI essentially makes the bold argument that energy and transportation prices never affect inflation.  CPI makes no such claim. What do you think caused inflation in the early 1970s when oil prices shot up? [Here is the most recent CPI data release from BLS](http://www.bls.gov/news.release/cpi.nr0.htm) which quite clearly shows both energy and transportation changes being reflected in the CPI.  I think when you make a claim you should at least look up if it matches the actual data. This is tiring trying to find evidence for/against so many dogmatic beliefs." "&gt; The BPP's inflation measure is markedly different from the government's. The economists average all the prices culled online, meaning the basket of goods is whatever you can buy on the Web. (Some items, like books, are most often bought online. Others, like cats, are not.) **Plus, the researchers do not weight certain items' prices,** ***even if they tend to make up a larger proportion of household spending.***  See, that last line is where the problem with this ""alternate/independent"" system lies.  It may not ""adjust"" the prices in the same manner as the CPI, but it operates on an equally flawed assumption (which at it's fundamental root is still the same as the ""hedonic adjustment"").  The fact that DVD's may have dropped from $20 to $5 each, or that last years (nearly obsolete) model of a laptop computer, tablet, or cell phone has likewise dropped from $500 to $250 -- and in that sense, just like the CPI excluding/omitting things like gas &amp; grocieries from the ""core inflation rate"" -- the BPP **similarly** creates a FALSE picture of ""inflation"" as being just a crude aggregated average of ""price changes"".  The problem ISN'T that the CPI (or other indices) include ""weighting"" and ""adjustments"" -- **it is that the weighting and adjustments are biased** -- and they have been altered many times over the past decades, and the methodology being used is one that is *biased* to create a ""lower"" inflation rate (one that dismisses a ""reduction in lifestyle/quality of goods"" as being an acceptable change, rather than a sign &amp; signal of the actual problem).  &gt;Still, thus far, the BPP has tracked the CPI closely.  Yes it has... extremely closely.  So closely in fact that it beggars belief." To get the factors you want, start with a complete amortization calculator and a tax deduction calculator, filling in values for your down payment, purchase price, tax rates, and mortgage rate.  If you are talking about a specific property, you should be able to get taxes for the current year, and perhaps using historical values estimate taxes going out.  Some calculators will include PMI (which you should avoid like the plague in an actual purchase).  Given some preliminary data, you can calculate your insurance. So once you have your PITI (principal, interest, tax, and insurance) monthly payment and tax deduction, you can calculate how much you spend a month on the house minus the deduction. To estimate maintenance costs, you could either figure out about what you'd need to replace in the given time you plan to stay put and use a rough estimate on what it is.  You can also use some rough estimates like this (1% of the property value yearly!) or this (moving the number up to a whopping 2%). Don't forget closing costs as a buyer and seller.  You can find estimates for these as well, and they are a function of the purchase price (usually around 2%). So to figure out how much it costs you to live in a house for X months, you can do So your total cost is Total Return Is: You can adjust that total return for inflation using this calculator to get your total return adjusted for inflation.  If projecting into the future, you can try a formula found here. To figure out the return on your investment, use So to figure out the total return adjusted you need for a given ROI, find Let's say you own a store, and you are looking to hire a front-counter person.  You'll be leaving this person alone with the cash register on a regular basis, so you want someone trustworthy.  You have two candidates: Bob has never stolen from a cash register in his life.  He has spent the last three years working a job where his employer regularly leaves him alone with the cash register. Ann has never stolen from a cash register in her life.  She has never had a job where she was left alone with a cash register. All else being equal, Bob is the slightly safer choice because he's had more opportunities to fail and hasn't, while Ann is a more unknown quantity. By the same token, a person who regularly borrows money and pays it back is somewhat safer to loan money to than someone who's never borrowed money before, simply because the latter is a more unknown quantity. if the rate of interest on both loans is 6.5%, it does not make any difference against which loan you offset. if you offset it with 50K loan, you will close it sooner [I am assuming your 50K loan is of shorter tenure compared to the 300K without considering offset]. The overall interest outgo looks larger if you close the shorter loan vs closing the larger loan, however the net effect is the same if you start putting out the balance $400 to the 300K loan after you have closed it out. Lol i work at a major prop shop and it is far from retail trading. Existing relations are important and if used well will result in an increased pnl.  Also, this is why i was referring to risk adjusted pnl to take into account different firms strategies.  Honestly your company might have a different way of doing things but at every prop shop and bank ive worked for my pnl was their primary focus.  Edit: i also wouldnt take such a condescending tone if i were you. You are far from the only person on reddit working in the industry. There are 2 approaches. One of them is already mentioned by @Afforess. If the approach by @Afforess is not feasible, and you can not see yourself making an unbiased decision, close the position.  By closing the position you will not get the best price. But by removing a distraction you will reduce amount of mistakes you make in the other stocks.