What is backtesting? Backtesting is a way of analysing the potential performance of a trading strategy by applying it to sets of real-world, historical data. The results of the test will help you lead ...

Backtesting is the testing of a trading strategy against historical data. Backtesting intends to test the statistical validity of a trading strategy. While the practice has various flaws and biases, ...

Learn how backtesting evaluates trading strategies with historical data, its benefits, limitations, and role in strategy effectiveness and risk management.

I explain why backtesting can work well--the relationship of in-sample to out-of-sample performance--and why sometimes it presents major problems.