Strategy backtesting

Backtesting runs a defined set of trading rules over past market data to estimate how the strategy would have behaved, producing metrics such as returns, drawdown, and risk diagnostics. It turns a trading idea into something measurable before any capital is committed.

For a bullion trader, backtesting is where a seasonal, trend, or mean-reversion idea earns or loses credibility. Inspecting drawdown and consistency, not just headline returns, helps judge whether a rule is robust or merely fit to one favorable stretch of history.

Backtests are vulnerable to overfitting, and they cannot capture every real-world cost, slippage, or future regime change. A strong historical result is evidence to scrutinize, not a guarantee, and live performance can drift from the backtest, so results are communicated responsibly with their assumptions attached.