Backtesting 101
What is backtesting ?
Let’s say you have a “hunch” or theory on investing. While we’ll talk about stocks here, it could be anything (commodities, FX, Pokémons, you name it). You then “execute” your theory by buying, holding, or selling your chosen investments, and… you lose your money! Or worse, you make some money without knowing why !
— — — — — — — — — — — ⭐️ SUBSCRIBE TO MEDIUM ! ⭐️ — — — — — — — — — — —
If only you could have “tested” your strategy in the past (hence the “back” in backtesting), so you could have avoided ruin, found a winning strategy (which is very hard to do), or speak coherently about a strategy (that strategy only works under such and such circumstances). Backtesting allows you to do all this and more.”
Why I am writing this ?
This post falls into a bit of a niche category, but since I am currently
learning about backtesting myself, I wanted to share my insights.
I couldn't find much information on the topic, as trading tends
to be either highly secretive, elitist, and confusing, or presented
by scammy characters.
Why you should read this ?
I assume you have an interest in finance and/or trading and may want
to develop your own strategies or even a custom backtesting pipeline.
However, on a broader level, if…