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How long should you backtest your trading system?

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How long should you backtest your trading system?


This is a common question for new traders, but there’s no simple answer. In this article, I will show you how to calculate how long to test a trading system.

A general rule of thumb is to backtest any trading system for as long you need to be able to trade with real money. 

It all depends on several factors.

Let’s discuss what backtesting looks like and how long to do it.

It all begins with defining our terms…

The Definition of “Long”

The first thing that I have to clarify is the what is meant by “long” because there can be some confusion here.

There are many interpretations of this word. Here are my definitions.

  • The amount of time spent backtesting
  • The amount of historical data used
  • Trades that have been backtested

When we look at the 3 definitions, we realize that “long” can mean entirely different things.

Each one will be addressed to clarify any confusion and reveal which ones are really important.

Time taken to backtest

As with many other things in life, how much time you spend backtesting doesn’t necessarily indicate the quality of the work done.



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