How do I read a backtest and what are its limits?

Strategy › Results

A backtest replays your rules over past candles and reports every trade it would have taken: the equity path, the drawdown, the win and loss sizes and the expectancy per unit of risk. Read the drawdown and the number of trades before the profit figure. Fees and slippage are included. The free plan limits backtests per day and how far back they reach.

Step by step

1. Equity pathEvery closed trade in order. A smooth line with few trades is less evidence than a rough one with many.
2. DrawdownThe deepest fall from a peak. Decide whether you could sit through it before trusting the profit.
3. TradesThe list. Open one to see where the rules fired on the chart.
4. LimitsApprentice: a daily cap and a shorter history window. Builder and Architect: unlimited.

Good to know

• A backtest cannot know the future. Treat it as a test of whether the rules do what you meant, not as a forecast.