Trading glossary
Backtesting
Backtesting is the process of testing a trading strategy against historical data to estimate how it would have performed. It is a way to check an edge before risking real money, but results depend heavily on data quality and realistic assumptions about slippage and costs. Backtesting answers whether a system has historical promise; journaling answers whether you actually execute it well live. The two tools complement each other. A journal such as Traders Vault focuses on live execution review, showing whether your real trades match the strategy you intended to run.
What is Backtesting in trading?
Backtesting is the process of testing a trading strategy against historical data to estimate how it would have performed. It is a way to check an edge before risking real money, but results depend heavily on data quality and realistic assumptions about slippage and costs. Backtesting answers whether a system has historical promise; journaling answers whether you actually execute it well live. The two tools complement each other. A journal such as Traders Vault focuses on live execution review, showing whether your real trades match the strategy you intended to run.