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Backtesting is a crucial tool for me, as it provides valuable data on the potential performance of my strategies before applying them in real markets. It allows me not only to optimize my strategies but also to manage risks and increase my confidence in my trading decisions. 
I recommend doing backtesting at least twice a week, even if you are profitable; it is a very powerful tool.

So you're answering your question, then? It sounds like you're quite confident that backtesting is important for a trader's success already. I believe nothing can guarantee your success as a trader unless you can see the future.

As far as I know, backtesting is usually used to train or manage trading bots. If you're doing daily trading wouldn't the trading result show whether your strategy works or not? How would you backtest your daily trading strategies? On which app? It would be nice to know if you have a dedicated tool for that.

By trading daily and consistently backtesting, you'll start to see your mistakes and identify the principles you're not fully following in your own strategy. Backtesting lets you put your strategies to the test—it’s like a shortcut or an accelerator. If you're truly dedicated and passionate about trading, I believe you should leverage this tool to regularly refine your strategy (not to change it, but to add certain insights). This will give you experience in no time since you'll have access to historical data from years before you even started trading.You can backtest on several trading platforms, but I personally use TradingView. To access this feature, you’ll need to subscribe to one of their paid plans. You can also use platforms like FXReplay.

What would be the difference between the two?

The difference between TradingView and FXReplay is that one is a trading platform where you can perform live analyses on various financial assets (TradingView), while the other is solely dedicated to backtesting (FXReplay).
And I bet that all beginner or professional traders know about TradingView. I say this because when I started trading, TradingView was the first platform I came across.

Thanks, I knew about trading view, but I never bought any plans or used backtesting at all.
All manually, all by hand ;D

There is nothing you can do that can guarantee your success, whether you are talking about long term or short term success, what backtesting can do is to give you the confidence of using a strategy that can be successful if used appropriately by you, albeit this assumes that you did your backtesting in the correct way, which is not a given as it is very easy to make mistakes at that stage and believe you have a great strategy when in fact this is not the case, a very dangerous scenario for you or any other trader.

Agree with almost everything you said about backtesting it has been a very good way of actually improving your strategy and learning from your mistakes. Backtesting helps you build your own personal strategy instead of just following others strategy. Backtesting gives one confidence when they see a similar setup they have done before and it gives one confidence in a strategy. This with a very good risk management makes one have a very good trading psychology which is hardest thing to get over and if done Makes one a great trader.

Backtesting is always going to tell you if a strategy will work for a particular pair or not so certainly backtesting is a great idea to be a successful trader. But one thing you need to understand backtesting is just actually giving you information of the past trend or simply the history of the pair, but does this guarantees success; it’s a No because past even are not usually indicative of future success as such backtesting gives you a better edge of getting a good result but it doesn’t necessarily guarantees the results

I can see your point, but what if the 'mistake' that I made gives me better results? Does this mean my strategy is a failure or does this show that I'm adapting or betting correctly? I'm not saying this to discourage people from backtesting though, just that it's probably a good idea to not blindly judge every unplanned action that you take as a mistake. Maybe more experienced traders can give insight into this.

That being said, the scenario that I talked about is rare, at least for the average joe. Most of them usually become too greedy and don't stick to their plan instead of improving on the fly because the market becomes aggressive and the patterns change. CMIIW.

Most traders I mean those who knows what they are doing knows their strength and weakness in trading, and during their weak it shows that the strategy they were applying weren't working and then backtesting should be the right thing to do, though most people ends up doing that but yet still falls into some lapses since they aren't perfect with it.

The language I understand from the op is like simply saying if the previous strategy doesn't work looking for a better one and play them could be the best than just sticking the previous, that is why most people who do back-test still results back to what they had been facing due to either greed or fear of a market pressure and forces.

Backtesting is a powerful tool, but it's not a crystal ball. While it can't guarantee success, it definitely helps refine strategies and manage risk. I think backtesting is valuable for daily traders too! Even if live results give some insights, backtesting lets you explore a wider range of scenarios with historical data. This helps identify weaknesses your live trading might miss.

No single tool guarantees success. But by constantly honing your strategy and learning from past mistakes, you're definitely stacking the odds in your favor.

Backtesting would really be that crucial or something that would really be needed when you do make trades. If you do find yourself having that kind benefit when it comes to your trading sessions then stick into that.
You are the ones who would really be finding out on which will really be that beneficial for you. You are the ones would be finding out on the moment that you do hover into this market.
There's no such thing about guarantees about success because there would be tons of factors will really be affecting the outcome and no one really knows on how it looks like.
Backtesting will really be that relevant, you would be able to make out analysis out of those histories on price movements in past which you could be able to apply on the current one.

Just like on what everyone is really that saying that not all does even know about back testing even if you are a trader. You would really be able to find out its relevance on the moment
that you do go in depth with trading. Backtesting might be your main considerations on trying to deal on with.

Of course not. Backtesting isn't a guarantee for trading success rather it is one of the tools that are needed in your trading toolbox that would give you an edge. If you have a strategy or multiple strategies. There is no better way to test if the strategy/strategies work than to backtest it to see if that strategy have worked out more times than it has failed.

Other factors you'd really want to consider is strategies itself, psychology, risk management, etc.


Backtesting alone won't cut it unfortunately.

Back testing is almost similar to simulation trading and should not be a guarantee 100%, but it helps give an idea about how the strategy might work (or whether it's so good or so bad)
Back testing relies on past market data with hope that the market trends remain the same in the near future. You can never know what the future market holds.

I think it just give you insight whether the strategy is already outdated or not. doesn't guarantee trader's success but at least it gives you insight that it might work.

yes it's a powerful tool since with trading you basically given minimal information and should be predicting on a probability, so it does help a lot, but then again, market dynamically change, if market just decided to do some random price action, your strategy might fail despite back testing.

always adapt to the market and its ever changing dynamic, the key for being a good trader always be able to adapt to the trend and follow the flow.

Yeah, I think his reply to my post makes it clearer. He also suggests that backtesting can help identify whether we're following our strategy closely or not, so it's not necessarily about creating new techniques but about figuring out habits and maintaining discipline too. I'm not sure how many people do backtesting regularly, but I'd assume the average joe who easily falls for emotional pressure probably doesn't do that. It takes some effort to stick with trading and improving your skills on that. CMIIW.

Ah so it was a kind of tool? I really thought it was some kind of a practice, you know "testing" but it may be done in a different way or it was its other variation due to that "back'' word there. Anyways, yeah, there are no other crystal balls other than the literal crystal ball one but even that one is I think still highly doubtful if it really can tell the future. And if it is true, then that person who does that won't offer his service anymore in public for some pennies because they will just use it personally to make thousands of dollars every single time.

Yes. This is only the most realistic thing that we had and this is better than nothing, so for sure many are still doing this, since they also came here to try and see if they can multiply their money or not.

Some traders say that backtesting helps them to test their trading strategies and see how they perform in the market, and it shows them positive results. But there are also traders who do not really consider doing backtesting, because they see that the market is dynamic and we cannot rely on past market data for the future. So it depends on the trader how they see this backtesting, if they see that backtesting is important enough, they can practice it, if the results are positive they can use it for their trading - or if they feel it is not important then they can ignore it. But please note that backtesting is a trading method, and no trading method guarantees trading success.

Since I learnt about trading, I have never back tested to know the strategy I’m using is okay or not. What I do most is forward testing and I can still know my mistakes when the market later plays out. I have seen many people back testing and using it as a very powerful tool for them to know the direction of the market using pst historical trend in the market. I see that it is an essential tool for most traders but since I have not tested it, I cannot ascertain it is for me. You as a trader must have gotten use to it and just want to be sure if it’s working for others. It is very important to know that what you see works for you may not work for others, it depends on how each person perceive the market and can tell the direction of it.

While there is definitely benefits of using it and learning more about your strategy, backtesting alone doesn't guarantee anything at all as well. Just because it could have made a lot of profit, doesn't mean it will make a lot of profit, there is no way of knowing if that will work or not.

If you could do backtesting, you can definitely see terrible ones and just get rid of those strategies, but when there is a great one, still be careful about it on the long term and if you could test with smaller capital first, then you can continue to grow it eventually. This is how most professional traders do, they put a small amount and if what they see actually works then they keep going with it and make more profit with bigger capital.

If you are a trader whose that been able to get engaged with forex or stocks trading then back testing is really that something that you cant missed specially if you are a full time trader or even that short term period then you would definitely be trying out to touch up this kind of strategy and this is something that very useful i should say but in speaking or talking about volatile market of crypto then backtesting i somewhat
utterly useless. Why? Movements of prices are really that too random and could really be able to mess up on whatever that you have done but having some strategies or analysis is much better
than to those who doesnt have. Right? If you do find out that this is something relevant or useful on your part then it will really be that ideal on including it into your analysis  rather than on having nothing at all.

If it brings results - use it, basically.
If it isn't worth it - leave it. And don't invest your time into it.
Have an edge in something that brings you profit, it least try to  ;D

Its a practice that you are doing before enter on the market. Live market is always tough to read. Its all about analysis, emotions end everything. Which actually not Work when you are on live trading. It is necessary to test your particular strategy before you enter on the market to understand if your trading are profitable or not. The live market isn’t same as you are doing it on demo.if you have enough confident after back test your strategy it could be increase your chance to make a positive entry and exit with a good amount of profit. Backtesting isn’t give you guaranty that you will win the trade but surely you will have a good idea.

It's a good way to go into VR mode, basically.
But then, the reality still awaits for you to make the real move and profit from it (or be rekt  ;D).

Are people still backtesting in trading? Those people must be novices in this "game." Backtesting is a very useless way to know if a strategy will work or if a trader will be successful in trading, they simply don't work. The reliable means of knowing the true capability of a trading system or the expertise of a trader is by forward-testing. This is a live testing activity that will truly show how your strategies work in real market conditions and also put you in live psychology issues in reality with the market's true dynamics.

It's wise just to do both, and then only do the real trading instead ;D
However, everybody chooses what suits them best.

It's a rigorous method to analyze past performance, a historical simulation that allows us to test strategies in a controlled environment. While it's not a perfect predictor, it significantly improves our chances of making informed decisions. Although it has its limitations, it's essential to remember that past performance isn’t always indicative of future results. However, when used wisely, it can be a valuable tool, a kind of historical what-if machine. It helps us learn from the past without actually risking our money. While it won’t tell us the exact future, it can give us a better idea of what might happen. I think that’s why many people use it, it’s the best we've got!

The market is always changing, but sometimes, patterns can be seen and worked around - only if the markers for such moves do continue and you have the expertise to prove why they would  ;D And even then, you may be wrong. That's how the market plays with you.

It's true that it can't be a bulletproof method of going into a real position, however, as it was said, it may be used to see some patterns and historical charts to put them into perspective.
In the end, it's just a tool to have some more evidence and facts, and metrics to work with.

Backtesting is indeed crucial but it isn't a guarantee that you're going to make profits when trading. There's no guaranteed strategy to use in trading but all the steps that we're being asked to use will help us to get closer to our goals when trading which is to be successful. Depending on historical data will give you an idea what the market is going to do and most times it come out exactly as you predicted although there are times the market will go the opposite direction. To be guaranteed success as a trader, you need to do many things and then hope to be lucky as you need luck for all your plans to go as predicted. Don't be afraid to end some trades in the losing side because allowing such trades to continue can make you to lose more money. Managing your risk as a trader is so crucial that many traders fail to do this and this is the actual cause of their continuous failures.

In the end, it's a choice, but I tell you based on experience, doing backtesting is a waste of time, it always fails, you can quote me anywhere. It's easy to see it working and gets you excited but in the end, after you face the live trading challenges you will realise you were just wasting your time. And I wonder why you said the two should be done because, if you are already doing the live testing, why the backtesting again?

You know lot of people has been too reliable on their strategy or feels so relaxed about techniques to make profits from it but at end they always incur much loses, even though it was back-tested they would always ends up losing. This is because there is no sure methods to trade but a trader can be disciplined enough to have a successful trading, although most times following the market trend also help because some profits can be achieved depending on the level of the trader's technicality.

What tools or platform you actually use for back testing if you don't mind to share and why you think which one is better from other please mention that as well when you reply I will be looking forward to know why you really think this is necessary even when we are making profit although when we are making profit we tend not to waste our time on such testings while we can find some good entry point but you know what I agree with you on this.

But to clarify that we should do back testing after few weeks when we learn some new indicator or method to analyze the market once we think we have learned enough then start practicing it in real market by keeping the capital small. You are wrong though about the title as back testing is not enough we need more than that to make a successful trade.

There isn't a tool that would make backtesting any better for your future. Backtesting is backtesting, it laterally means you pick a strategy and then you hope for that strategy to do better in the future by looking at what it could have done in the past. So obviously, using whatever tool you have, the very best could be used, still wouldn2t change the fact that what it could do may not be what it will do.

This is why backtesting is a very risky way to move forward, a lot of people try to do it, but most of them fail and you shouldn't trust it at all. I am not saying don't do it ever, of course you can do it, just don't rely on it and doesn't matter what tool he is using, the result will not be changing. Use it for understanding the markets, but we have seen months where it goes up, and following month it goes down, using backtesting would give you great results on the good month that happened, and strategy will fail on the bad month that follows afterwards.

It is not really surprising this is the case, a backtest only verifies if the strategy can make profits when used optimally, however we know very well that no trader can execute a strategy to perfection, so when you think about it, it is basically impossible to get the same results you can get during a backtest, so for anyone doing this, it is critical they also test their strategy trying to simulate conditions more closely related to the reality they face before they determine if a strategy is good or not.