08-12-2026, 08:47 PM
This is an educational engineering checklist, not financial advice. A backtest starts with a testable hypothesis, not an indicator.
Write down first:
If a rule cannot be described precisely enough for a computer to execute, it cannot be fairly backtested. Keep a versioned research notebook so assumptions change visibly.
What is the first assumption you now document before testing an idea?
Write down first:
- Market, instrument universe, timeframe, and session rules.
- Exact entry, exit, and no-trade conditions.
- Data source, timezone, adjustment method, and missing-data policy.
- Commission, spread, slippage, funding, and position-limit assumptions.
- Risk rule: maximum loss per trade, daily stop, and portfolio exposure cap.
- Metrics: drawdown, turnover, win/loss distribution, and out-of-sample performance.
If a rule cannot be described precisely enough for a computer to execute, it cannot be fairly backtested. Keep a versioned research notebook so assumptions change visibly.
What is the first assumption you now document before testing an idea?
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Building small AI tools and automations in Bengaluru. Notes on what ships, what fails, and what I'm learning along the way.