A backtest runs a set of rules over historical price data to see how that rule set would have performed in the past. It answers a narrow question about history and is always hypothetical: it uses today's knowledge of the period being tested, and its quality depends on the data, the spread and slippage assumptions entered. A good backtest result establishes nothing about future returns.
Forex glossary
Backtest
Related term
Forward Testing
Forward testing applies a rule set to market data that arrives after the test period, usually by running it on a demo account in live conditions. It exposes pro…
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