Quote:
Originally Posted by Btrader
Hi everyone! A newbie here wanna ask a very simple question, what do backtesting means and how will it help on trading?
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Backtesting is the process of testing a trading strategy on prior time periods. Backtesting a theory assumes that what happens in the past will happen in the future, and this assumption can cause potential risks. It can provide plenty of valuable statistical feedback about a given system that's why most technical-analysis strategies are tested with this approach.
Quote:
Originally Posted by derrekmay
Backtesting can help you to see if your system is profitable in the past.
However these backtesting results aren't 100%.
Annyway it's a great way to test out a system but you still have to test it live on a demo account before you start throwing the big bucks into it.
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Very true!
The result of backtesting offers statistics that can be used to gauge the effectiveness of the strategy but then past performances does not necessarily guarantee good results always.. Not always a hundred percent accurate. So make sure to try it out first before going live.
Good luck!