backtesting
Understanding Backtesting in AILidex
Backtesting is a critical process for evaluating the performance of a trading strategy using historical data. It allows traders to test their strategies in a risk-free environment before deploying them in live markets. In AILidex, backtesting serves as a vital tool for quickly testing and optimizing trading strategies, enabling users to identify the most effective settings for their preferred markets.
Executing Backtesting in AILidex
AILidex includes a powerful backtesting engine that allows users to simulate their trading strategies on historical data. To initiate a backtest, follow these steps:
- Selecting a Profile: Navigate to the profile selector within AILidex and choose the profile you wish to backtest.
- Data Collection: Utilize the data collector to download historical data for the selected trading pairs and timeframes.
- Commencing Backtesting: Start the backtesting process, which will execute the selected strategy on the historical data.
- Analyzing Results: Once the backtesting is complete, analyze the results provided in the backtesting report. This includes profitability summaries, historical price charts, trade logs, and more.
Key Considerations for Backtesting
Profile Selection: Ensure to select a profile configured for paper trading (using the trading simulator) to prevent any changes made during backtesting from affecting real trading profiles.
Initial Portfolio: The initial portfolio used in backtesting is determined by the configured Starting Portfolio within the selected profile. Ensure it contains sufficient funds for trading strategies to execute effectively.
Traded Assets Settings: During backtesting, the selection of coins and pairs is disregarded, as the data file used for backtesting provides the traded pairs. The reference market is adjusted to the common quote of the datafile’s traded pairs.
Data Collection Methods
Full History Exchanges: These exchanges allow downloading complete historical data for a specified time range, providing comprehensive candle data for backtesting.
Other Exchanges: Exchanges that do not permit historical data downloads offer limited data, usually the last 500 candles. Selecting a short timeframe may result in truncated backtesting.
Final Insights
Backtesting within AILidex is an essential tool for refining trading strategies and optimizing performance. By carefully analyzing backtesting results and considering various data collection methods, traders can make informed decisions and enhance their trading strategies effectively.