Hey everyone, I’m planning to backtest my day trading strategy using 2 years of data. I’d love to hear your thoughts on which two years would be the best to focus on. Do you think it would be more beneficial to backtest a period that covers multiple market cycles? if so, which years do you recommend? I’d appreciate your input!
When I was more interested in developing my own strategies I always used to backtest a multiple-month period of at least a year, which started and finished at about the same price level.
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Hi, in general the more data the better, more complicated strategy, higher number of trades need, I personally use different periods of data but always use data during crisis times
oh wow, interesting, never heard of someone doing that before. any reason for doing it like that?
right, thank you, I have decided to backtest 2020-2021
Yes, it’s so that I don’t find I have backtested over an unusually bullish or unusually bearish period. I want a strategy to perform equally well in almost all market conditions.
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I’d say it’s definitely a good idea to cover different market cycles so you can see how your strategy performs in both volatile and stable conditions. Maybe try something like 2018-2019 for a mix of regular market activity and then 2020-2021 to see how your strategy handles more extreme volatility (COVID market craziness). This way, you get a nice balance between calm and chaotic periods.
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