Backtesting
Run a strategy over historical data and read the results - equity curve, drawdown, statistics and trades.
A backtest shows how a strategy would have traded in the past. It's the fastest way to find out whether a rule does what you think it does.
Run a backtest
- Open the strategy in Strategies.
- Under Backtest settings, choose the instrument, timeframe and date range.
- Select Run backtest. The run happens in the background - the status shows Running… until it finishes.
Read the results
| Result | What it tells you |
|---|---|
| Equity curve | How the account value would have moved over the test period |
| Drawdown | The largest falls from a previous peak - how painful the strategy is to hold |
| Total return | Gain or loss over the whole period |
| Win rate and trade count | How often trades won, and whether there are enough trades to judge |
| Average win and loss | Whether winners are big enough to pay for losers |
| Trade list | Every simulated entry and exit, with prices and result |
Some strategies, such as relative strength, compare a stock against an index. Those need a benchmark chosen in the backtest settings.
Getting a fair picture
- Test enough history to cover rising, falling and sideways markets.
- Look at the trade count. A great result from a handful of trades is mostly luck.
- Change one thing at a time so you know what made a difference.
- Be suspicious of perfection. Tuning parameters until the past looks ideal usually makes the future worse.
Backtests use historical prices and simulated fills. They can't fully capture slippage, liquidity or costs, and past results don't guarantee future returns.
How many backtests you can run per day and how much history you can test depend on your plan.
Next: From paper to live.