What backtesting can and cannot tell you

Backtests are useful for validating logic — and easy to over-trust. Notes on testing trading software responsibly.

A backtest shows how a set of rules would have behaved on historical data. It does not predict future performance.

We treat backtesting as a way to validate implementation and risk controls, followed by forward demo testing before any live deployment.

Trading involves substantial risk, and no software or testing process can assure profitable outcomes.