// 01 What Exactly is Backtesting?
When you backtest a strategy, you apply your entry and exit rules to historical OHLC (Open, High, Low, Close) data and simulate every trade it would have taken. The output is a complete trade log — every buy, every sell, the P&L, and summary statistics.
Think of it as a time machine for your strategy. You can test a 5-year strategy in seconds. On MyAlgoKart, backtesting runs on real NSE 1-minute data — your results reflect actual Indian market conditions including gaps, volatile opens, and intraday patterns unique to NSE.
// 02 What Backtesting Tells You
A good backtest gives you five key numbers:
- Win Rate — What percentage of trades were profitable. 50%+ is a starting point.
- Average P&L per trade — How much you make or lose on average per trade.
- Maximum Drawdown — The worst losing streak. This tells you how much capital you need to survive it.
- Profit Factor — Total wins divided by total losses. Above 1.5 is generally considered good.
- Number of Trades — Too few means the result is not statistically reliable. Aim for at least 30 trades.
// 03 The Biggest Mistake — Overfitting
Overfitting happens when you tweak parameters so precisely to historical data that the strategy looks great on paper but fails live. Example: testing every RSI value from 20 to 40 and picking 33 because it gave the best backtest — that value only worked for that specific historical period.
The fix: out-of-sample testing. Split your data — backtest on 70%, then test on the 30% you never touched. If results hold up, the strategy is more robust.
// 04 How to Backtest on MyAlgoKart
MyAlgoKart provides 90 days of real NSE 1-minute OHLC data. Select any strategy (EMA, RSI, MACD, Supertrend, ORB), set your parameters, choose a symbol and date range, and run in seconds. The trade log shows every entry, exit, bars held, and P&L. The equity curve shows how your balance would have grown or declined.
Good starting point: Supertrend strategy on RELIANCE or ADANIPORTS, 5-minute timeframe, 60-day backtest window.
// 05 Backtesting vs Forward Testing
Backtesting uses historical data — always done first. Forward testing (paper trading) runs the strategy on live market data without real money — done second. Both are essential.
A strategy that passes backtesting and performs similarly in a 30-day forward test is ready for live deployment with small capital. Never skip forward testing — live markets have slippage and conditions historical data cannot fully replicate.