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Methodology
How Backtest calculates strategy tests
Backtest is a trading research tool. It helps users evaluate rules on historical candles and paper signals, but it does not place live trades or provide investment advice.
1. Inputs
A backtest starts with a symbol, timeframe, date range, strategy rules, trade direction, position size, commission, slippage, stop loss, take profit, and exit mode. Preset strategies use deterministic rule templates. Manual strategies use the parsed rule output supplied by the backend.
2. Market data
Backtest loads historical candles from supported market data providers. Available history can vary by symbol, provider, and timeframe. The app limits candle count by plan and timeframe to keep tests responsive and reduce unstable oversized runs.
3. Trade simulation
The engine walks forward through candles in time order. A strategy can open a trade only when its entry rule is triggered and no prior position is still open. A trade closes through stop loss, take profit, signal exit, or end of available data depending on the selected exit mode.
4. Costs and risk
Commission and slippage are applied to simulated entries and exits. Stop loss and take profit are calculated from the simulated entry price. Results include net profit after estimated costs, win rate, max drawdown, profit factor, and trade-level details.
5. Strategy confidence score
The confidence score is a quality check for the backtest sample. It considers trade count, candle history, profit factor, net profit after costs, win rate, drawdown, and whether results depend too much on one large winner. A high score does not mean future profit is guaranteed.
6. AI analysis
AI analysis can review trade outcomes, losing clusters, stop-loss behavior, take-profit distance, and possible rule improvements. AI output is advisory research only. It can be incomplete or wrong and should not be treated as financial advice.
7. Rule execution discipline
Preset strategies and parsed manual strategies are executed as explicit entry and exit conditions. The simulator does not invent extra entries after the run starts. If the user selects long-only, short-only, or both directions, that direction filter is applied before trades are opened.
8. Paper bot limitations
Realtime bots reuse saved strategy setup to evaluate new candles and send paper signal notifications. They are designed to help users observe a strategy, not to execute orders. Users remain responsible for every real trading decision outside Backtest.
Important limitation
Backtests are historical simulations. They can be affected by data quality, fees, slippage assumptions, lookahead mistakes in poorly defined rules, market regime changes, and overfitting. Backtest does not connect to brokerage execution accounts and does not trade real money.