Backtesting Your Strategies

A strategy is only as good as its historical edge. Backtesting allows you to simulate your logic over past market conditions to evaluate performance and risk.

Running a Simulation

1. Navigate to the Backtesting tab.
2. Select your saved strategy from the dropdown menu.
3. Choose your target trading pair (e.g., BTC/USDT) and timeframe (e.g., 5m).
4. Configure your starting capital (e.g., $1,000) and input the exchange commission rate (Binance Spot is typically 0.1%).
5. Click Run Backtest.

[!Image Placeholder] (Screenshot showing a highly profitable equity curve with a Sharpe Ratio > 2.0)

Interpreting the Results

The backtester will generate an interactive chart. The primary line is your Equity Curve, tracking your account balance over time.

Key Metrics to Watch:

• Total Net Profit: The absolute amount gained or lost after commissions.
• Maximum Drawdown: The largest peak-to-trough drop in your portfolio. This is your primary risk metric. If historical drawdown is 30%, you must be comfortable losing 30% in live trading.
• Win Rate: The percentage of trades that resulted in a profit.
• Profit Factor: Gross profit divided by gross loss. A value > 1.5 is generally considered excellent.