backtestingillä
Backtesting, known in Finnish as "backtestingillä," is a crucial process in finance and algorithmic trading. It involves testing an investment strategy or trading algorithm using historical data. The goal is to evaluate how the strategy would have performed in the past, thereby providing an indication of its potential future profitability and risk.
The process typically begins with defining a specific trading strategy, including entry and exit rules, position
Key metrics analyzed during backtesting include total return, annualized return, Sharpe ratio, maximum drawdown, and win/loss
It is essential to conduct backtesting diligently to avoid common pitfalls. These include overfitting, where a