Backtesting
Validate Your Strategy
Backtesting is the general method for evaluating a trading strategy and how well it has performed in the past. Backtesting assesses the viability of a trading strategy by evaluating trade signals generated on the current strategy using historical data to produce results, taking them as historical performance if the strategy were deployed in that time frame. It provides some level of confidence to employ it going forward. However, past performance is definitely not a guarantee of future performance.
Time Frame
Backtesting can usually be done in six different time frames: 1 day, 1 week, 1 month, 3 months, 6 months, and 1 year. A longer time frame can weed out market noise over a period of time, while shorter time frames can evaluate current prevailing trends. It is good practice to draw conclusions from backtesting multiple time frames for each bot.
Backtesting can only be done within the selected time frame from the day the bot is created, going backwards in time. StockHero supports custom date and time setting for backtesting for users on our Professional Plan.
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