Insane Back Testing Regime

As has been mentioned previously, developing automated trading software is easy. However, making profitable ones that don’t gamble with your money is hard and takes a lot of expertise and experience.

Back testing is an important tool to see the future potential of a strategy but even here we have to be very careful. There is a thing called ‘curve fitting’ which is where you fine tune the trading software to trade perfectly over a specific period of time. This is one of the biggest mistakes in strategy development as it doesn’t cater for unknown market conditions.

To ensure our software is a resilient as possible, we carry out an insane backtesting regime. 

  • We test over different time periods. 

  • We test by altering the parameters slightly to ensure that the strategy is robust. 

  • We test using high quality tick data to give a realistic result

  • We test on 2 different platforms to ensure similar results

  • And more…

Saying all that, back testing is no guarantee of future performance but we work hard to give it the best possible chance that it will at least achieve similar results. We believe that this is one of our keys to success.

Posted 20 September 2023