Backtesting
a.k.a. Backtest
Running a trading strategy's rules over past price data to see how it would have done.
Backtesting is a time machine for a strategy. You take your exact rules, "buy when this happens, sell when that happens", and replay them over months or years of old charts to see the trades they would have made and the money they would have won or lost.
It is the cheapest way to kill a bad idea before it kills your account. But it has traps. Tweak the rules until they fit the past perfectly and you have built a key for one old lock. Ignore fees and slippage and a winner on paper bleeds in real life. Crypto's short history and wild volatility make both traps deeper.
Tuning a strategy until the backtest looks perfect. A strategy that fits the past too snugly usually falls apart on live prices.
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