Backtest
Updated 2026-09-20
Definition
A simulation of a strategy on historical data to estimate how it would have behaved.
Why it matters
It should be done with rules written beforehand, costs included and on a large sample; its enemies are look-ahead, overfitting and small samples. It doesn't guarantee future results.
Practical example
100 trades tested on a year of EUR/USD with +0.2R expectancy after costs.
Learn more
Course lesson: Backtesting and validation: verifying a strategy without telling yourself storiesRelated entries
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Educational content, not financial advice. Trading involves risk.