What is Backtesting?
Backtesting is a methodology used to assess the effectiveness of trading strategies by simulating their performance on historical data. It allows traders and investors to test hypotheses and adjust parameters before applying them in the real market.
How Does Our System Work?
Our backtesting API automates this process by analyzing multiple technical indicators such as EMA, RSI, MACD, ADX, Bollinger Bands, and Ichimoku Cloud. Based on historical data, it calculates the accuracy rate of each generated signal, enabling fine-tuning to maximize trading precision.
How Do We Calculate Hits and Misses?
Our backtesting algorithm follows a strict process to assess the effectiveness of generated signals. The accuracy rate is calculated as follows:
- Data Collection: Retrieves historical asset prices across different timeframes.
- Application of Technical Indicators: We process prices with multiple indicators to generate buy and sell signals.
- Validation Window: A period is defined to check whether the forecast was accurate by comparing it with the real price movement.
- Comparison with Future Price: If a buy signal is followed by a price increase within the validation window, the signal is considered a hit.
- Accuracy Rate Calculation: The percentage of correct signals out of the total generated signals is presented as the accuracy rate.
Key Features
- Strategy simulation across multiple timeframes (1m, 5m, 1h, 1d).
- Analysis using advanced technical indicators.
- Generation of buy and sell signals with calculated accuracy rates.
- Integration with Binance and CoinGecko for market data.
Benefits of Backtesting
Using backtesting helps validate strategies before applying them in live markets, reducing risk and improving trade efficiency. With the accuracy rate provided by our API, traders can make decisions based on concrete data.