Backtesting

The process of testing a trading strategy using historical data to ensure its viability before risking any actual capital.

Why it matters

Backtesting is by far the best way to ensure that your strategy actually works before risking real money. By watching your strategy perform on historic data allows, you to develop confidence in its ability to perform on live data.

How to backtest with Volume

1. Define your strategy: Clearly define the rules of your strategy, including entry and exit conditions, risk management rules, and any other details.
2. Create a new paper account: Using a realistic account size and relevant market, create a new paper account to visualize how your new strategy compares with past performances.
3. Create a new game: Select historical data that is relevant to your strategy, including the time frame, asset, and market conditions you plan to trade in.
4. Test your strategy: Use your historical data to test your strategy and evaluate its performance. Look for patterns, trends, and other insights that can help you refine your strategy and improve its performance.
5. Journal your performance: Using the built in journaling tools, document your trades with as much detail as possible. This will help you identify patterns, track your progress, and improve your performance over time.
6. Iterate and improve: Use the insights you gain from backtesting to refine your strategy and improve its performance. Test new ideas, experiment with different techniques, and continue to refine your strategy until you are confident in its ability to perform.