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<p id="isPasted">A backtest is usually coded by a programmer running a simulation on the trading strategy. The simulation is run using historical data from stocks, bonds, and other financial instruments. The person facilitating the backtest will assess the returns on the model across several different datasets.</p><p>It is also essential that the model is tested across many different market conditions to assess performance objectively. Variables within the model are then tweaked for optimization against several different backtesting measures.</p>