How to Accurately Backtest Trading Strategies
With futures, the other consideration is whether you are doing portfolio backtesting or single instrument backtesting. Most retail traders probably don’t have enough capital to do run portfolio futures trading strategies. You’ll need several hundred thousand dollars in your account to run a diversified trend following strategy in futures, for instance, because the margin requirements are quite high. Backtesting instils confidence in traders before engaging in live trading.
Backtesting saves you time
A backtest can’t capture such mistakes and that’s why you need to stick to the trading plan. For the cash index of the S&P 500, we get an average of 0.49%