Backtesting Trading Strategies

What is Backtesting

Backtesting is the process of testing a trading strategy on historical data to evaluate its effectiveness before using it in real trading.

Why Backtesting is Needed

• Effectiveness Evaluation — understand how profitable a strategy is
• Problem Identification — find weaknesses in the strategy
• Parameter Optimization — find optimal settings
• Risk Reduction — avoid losses on real funds

How to Run a Backtest

Step 1: Bot Configuration

1. Go to create a new bot
2. Fill in all strategy parameters
3. Configure TP/SL levels
4. Select trading pair and testing period

Step 2: Run Backtest

1. Click "Run Backtest"
2. Specify testing period (start and end date)
3. Wait for calculation to complete

Important: When running a backtest, completion mode is automatically set to "End Date", and an end date must be specified.

Step 3: Analyze Results

After backtest completion, you will see:

• Total Profit/Loss — final financial result
• ROI — return on investment percentage
• Number of Trades — how many trades were executed
• Profitable Trades Percentage — ratio of profitable to losing trades
• Maximum Drawdown — maximum balance drop from peak
• Sharpe Ratio — risk-adjusted performance indicator
• Balance Chart — visualization of balance changes over time
• Trades Chart — display of entry and exit points

Interpreting Results

Good Indicators

• Positive total profit
• ROI above 10-20% for the period
• Profitable trades percentage above 50%
• Small maximum drawdown (less than 20%)
• Sharpe ratio above 1

Poor Indicators

• Negative total profit
• Large maximum drawdown (more than 50%)
• Low profitable trades percentage (less than 40%)
• Negative Sharpe ratio

Strategy Optimization

If backtest results are unsatisfactory:

1. Change Entry/Exit Parameters — try other indicators or conditions
2. Adjust TP/SL Levels — they may be too aggressive or conservative
3. Change Order Sizes — try different base and averaging order amounts
4. Try Different Period — strategy may work better in certain market conditions
5. Study Failed Trades — find common patterns in losing trades

Backtesting Limitations

Backtesting does not guarantee future profitability for the following reasons:

• Past ≠ Future — market conditions change
• Slippage — actual execution prices may differ from historical
• Fees — exchange fees are considered in real trading
• Liquidity — real trading may lack liquidity for large orders
• Psychology — emotions may affect real trading

Recommendations

• Test strategy on different periods (bull market, bear market, sideways)
• Use sufficient historical data volume (at least several months)
• Check strategy on different trading pairs
• Don't over-optimize — too precise tuning to historical data may not work in the future
• After successful backtest, start with demo mode before real trading

Backtest History

All executed backtests are saved in history. You can:

• View results of past tests
• Compare different strategy versions
• Use successful settings to create a real bot

Unlimited Backtests Subscription

For active traders, an unlimited backtests subscription is available. This allows:

• Testing many strategy variants
• Optimizing parameters without limits
• Experimenting with various approaches

Learn more about subscription in the "Billing" section.