Backtesting
Testing a set of trading rules on historical data to see how they would have behaved.
Why it matters for AI trading tools
AI tools make backtests fast to build, which makes it easy to fool yourself. Include costs and check for overfitting.
Related on TraderStacks
More terms: Grid bot · Overfitting · all terms
Education only. This definition explains a concept; it is not investment advice or a suggestion to trade.