Backtesting is a way to test a trading strategy using historical data. Imagine: you have an idea to buy Bitcoin when its price drops 5% in a day and sell it three days later.
But how do you know if it works without losing real money? Backtesting provides the answer.
With their help you can:
Assess the profitability of the strategy.
Identify risks such as major drawdowns.
Adjust the parameters, for example, change the price drop threshold from 5% to 7%.
Backtests are like a flight simulator for a trader: these don’t guarantee success in the real market, but they help avoid disasters. Platforms like Veles Finance make this process accessible even to beginners by offering convenient tools for analyzing ideas.
How to conduct backtests
Creating a backtest is a sequential process:
Define a strategy. For example, use indicators like moving averages or RSI.
Select data. Decide which timeframe and assets to test — e.g. Ethereum daily charts.
Adjust the settings. Specify t
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