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What length should you backtest a trading system?

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What length should you backtest a trading system?


This is a common question for new traders, but there’s no simple answer. This post will explain how to determine how long it takes to test a trading strategy.

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 talk about what backtesting is and how long it should take.

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.

Different meanings of this term exist. I will cover them in this post.

  • The amount of time spent backtesting
  • The amount of historical data used
  • Backtested trades

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

To clear up any confusion and to show you which ones really do matter, I will address each one.

Length of time spent backtesting

The amount of time spent backtesting is not an indicator of how good the work was.



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