Why Backtesting Your Crypto Investment Strategy Is A Must

The volatile nature of crypto prices presents both their selling points and their biggest drawback to every investor out there. If the cards are played right, a well-timed investment like buying the dip results in huge rewards as prices swing high. A good number of investors have, however, shied away after reporting huge losses. It all boils down to backtesting one’s crypto investment strategy. Read on to understand the importance of the process. What is Crypto Investment Strategy Backtesting? A crypto investment strategy backtesting refers to the application and running of a chosen trading strategy to historical trading data. The key purpose is to gauge how well the strategy performs against known parameters. It is an analytical method done by investors before implementing the said crypto trading strategy onto their investments. It determines the level of productive effectiveness held in the trading strategy, important in influencing the choice of its real-life application. How to Run a Backtest The backtest process contains complex mathematical simulations, often run using automated trading bots. The backtest itself is done to help investors understand how these trading bots function, a prerequisite for safe investment strategies. The first step involves selecting the market one wishes to run the backtest on. The investor then adds the required trading tools and indicators, including the trading bots onto the platform. One h...