What a backtest is, and what it is notBeginner

The basics in five minutes: rules, data, costs and the limits of testing the past.

Definition

A backtest applies a fixed set of rules to historical candles and records every trade those rules would have taken: entry, stop, target, result. At the end you see win rate, profit factor, drawdown and an equity curve.

What makes a backtest honest

Real data rather than invented prices. Costs included. Signals only on closed candles, so nothing uses information from the future. The same rules on every trade, without exceptions added after seeing the result. Enough trades to mean something.

What it cannot do

It cannot predict the future, only describe the past. It cannot test judgement you cannot put into rules. It cannot tell you whether you will follow the rules on a losing streak.

A good workflow

Write the idea in plain words. Run it. Look at the trades on the chart and check the engine read your rules the way you meant. Change one thing at a time. Test on another market and another period before trusting anything.

Try it on your own strategy

Write your rules in plain words and test them on real data in seconds.

Open WickCheck

More lessons

Why most strategies need a human behind the screenWhat a backtest can and cannot tell you about discretionary trading, and how to use both.Trading sessions and killzones: times, what happens in each, and how to test themAsian, London and New York sessions and the ICT killzones, with exact times in New York and London time, daylight saving notes and test rules.How costs quietly eat small edgesSpread, commission and slippage explained, and why tight stops make them worse.Why 30 trades prove nothingHow luck hides in small samples and how many trades you actually need.When a great result is just luck: overfittingHow to tell a real edge from a curve-fitted one.R, risk per trade and drawdown in plain wordsHow position size, R-multiples and drawdown fit together.How to read your WickCheck resultsWhat each number means and the order to look at them in.

Education only, not financial advice. Definitions vary between teachers; these are ours, written for clarity.