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Backtest

In one line: Testing a trading rule on old price data to see what would have happened.
Watch: Buy the Open, Win 54%? We Tested It: No Edge Shown · open on YouTube

A backtest is a time machine for trading rules. You take a rule, like "buy at 9:30 and sell an hour later". Then you check what it would have done on years of past prices.

It is cheap, fast and nobody loses real money. The catch: the past is not the future, and a backtest can look great just by luck. That is why we also include costs, compare with random entries and keep fresh data aside (see in-sample vs out-of-sample).

Think of it like checking if an umbrella would have kept you dry last year. Useful. Not a promise about tomorrow's weather.

Trading terms

Last checked: 2026-11-04 · Educational, not financial advice.

Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.