Quantitative Trading Strategies Using Python: Technical Analysis, Statistical Testing, and Machine Learning

© The Author(s), under exclusive license to APress Media, LLC, part of Springer Nature 2023

P. LiuQuantitative Trading Strategies Using Pythonhttps://doi.org/10.1007/978-1-4842-9675-2_7

7. Backtesting a Trading Strategy

Peng Liu¹  

(1)

Singapore, Singapore

 

As the name suggests, backtesting refers to the process of testing a trading strategy on relevant historical data before rolling it up to the live market. It gives an indication of the likely performance in different trading scenarios. In this chapter, we delve into the intricacies of backtesting a trading strategy, starting with an understanding of why backtesting is an important component in quantitative trading.

Note that while backtesting can offer insightful results, it is only as good as ...