Total Return vs. ETF vs. Index vs.?

Hi I'm working on systems that trade 'SPY'. I'm a very pleased Norgate customer, and I have my data set up to be dividend-adjusted. That being said, I assumed dividend-adjusted SPY was essentially the same as S&P 500 Total Return, but when I ran a 5000 bar percent change exploration they differed significantly. So my question is, to get the most realistic backtest for a system trading SPY going forward, should I continue to use dividend-adjusted SPY or $SPXTR?? I appreciate any advice/help as I don't seem to understand the difference.
Regards,
Tony R

@TonyR I think that the S&P 500 Total Return Index is created by having all dividends reinvested into the index. As such it will compound the return and increase over time. The exact mechanics of when (and into what) exactly the dividends are reinvested is unclear to me.

I don't think it useful to backtest using the $SPXTR price series since there isn't a large liquid ETF (or futures contract) to trade so your strategy should be built to trade an actual security that you might be buying and selling (in this case the SPY or SP500 futures contracts).

But you could use the $SPXTR as your baseline to compare your returns against. i.e. make the comparison to find out if your strategy is "better" than buy-and-hold (and reinvest in) the index.

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Hi Larry, thank you for the response, you are correct. I had also reached out to Norgate, even though it was outside of their normal customer support, and I received the following (I'll post it here should anyone have a similar question in the future):

"The way that dividends in $SPXTR and SPY dividends are handled is quite different. For the exact details, you need to consult the index methodology and prospectus.

In a nutshell, $SPXTR assumes dividends are earned immediately (on the day prior to the ex-date) and re-invested into the index on that date. In real life, the dividend would be paid to you on the payment date which can be some weeks later.

SPY only pays out dividends quarterly, plus there are also management fees too."

Thanks again @portfoliobuilder and Norgate!
Tony