#option backtesting

Backtesting, if used correctly, is a powerful tool to help evaluate trading strategies. However, as with any tool, it has limitations. As a silent observer over the past few months, we’ve witnessed people pile into now crowded strategies after backtesting them (ehm the #920Straddle and its variations). Some people made money. Others didn’t. Some lost a lot with the so called #freaktrades. Our purpose here is to explain the benefits and limitations of backtesting trading strategies in India as we understand them, while also making backtesting accessible to everyone interested.

Backtesting, if used correctly, is a powerful tool to help evaluate trading strategies. However, as with any tool, it has limitations. As a silent observer over the past few months, we’ve witnessed people pile into now crowded strategies after backtesting them (ehm the #920Straddle and its variations). Some people made money. Others didn’t. Some lost a lot with the so called #freaktrades. Our purpose here is to explain the benefits and limitations of backtesting trading strategies in India as we understand them, while also making backtesting accessible to everyone interested.