why our backtesting methodology is so important
To create, one must first question everything!!!
What is backtesting? Backtesting is the process of testing an investment strategy using data from the past to see how it would have performed.
- An essential part of developing an investment strategy.
- Shows if a strategy performs well in periods when it is supposed to, and vice versa
- Produces insights on how the strategy might be improved
With the help of backtesting, we test multiple strategies. Backtesting lets us collect a huge amount of information and data related to the strategy. The backtesting historical data lets us witness the way we want our plan to perform.
Backtesting is necessary as it is the way to find a profitable strategy. Though there are several strategies, it is quite challenging to find a strategy that works and one which is compatible with our approach. It is necessary to find a good balance between risk and profitability.Â
Backtesting is the way to generate or discover excellent investing strategies and ideas. It is a good opportunity to identify which strategies will work and which will not. Backtesting is quite like a mirror to reality.Â
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