Tag Archives: backtesting

What Is A Quant Trader?

Quant trading is in fashion nowadays. This article may help you in separating the wheat from the chaff.

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Long-Term Backtests Can Be Misleading

Authors of popular books and blog articles often present long backtests of certain strategies that exhibit superb risk-adjusted performance. It is important to realize that it is highly possible that these superb results are due to market conditions that may … Continue reading

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Inferences From Backtest Results Are False Until Proven True

The validity of any backtest results should not be assumed no matter how credible their source appears to be. There are many factors that can contribute to incorrect backtest results, especially in the case of more complex strategies, such as … Continue reading

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An Example of the Perils of Backtesting

I have discussed the perils of backtesting numerous times in this blog. It is important that all traders realize that backtesting hides many pitfalls and it is one of the three main contributing factors to massive losses by retail traders … Continue reading

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Putting Their Hindsight to Work for You

Hindsight can be useful to traders and investors if they realize that the bulk of market analysis about the markets is based on it. For example, a trend is realized only in hindsight because while it is formed every point … Continue reading

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The Fundamental Problem of Backtesting and Why It Has Not Helped Much Technical Traders

Trying to discover an edge by randomly backtesting ideas is equivalent to looking for a needle in a haystack. More than 25 years have passed since backtesting software became available to retail traders and the difficulty in finding an edge persists … Continue reading

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Fooled by Random Backtesting

Backtesting trading systems on historical data is again becoming popular almost 30 years after it started being used by individual traders due to recent advances in web technology and server speed that allows its online implementation. If one knows what … Continue reading

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