What are the common mistakes to avoid when performing a crypto backtest?

8 answers

• Jasvinder SandhuNov 02, 2022 · 3 years ago
  One common mistake to avoid when performing a crypto backtest is not using accurate historical data. It's important to ensure that the data you are using for your backtest is reliable and up-to-date. Using outdated or incorrect data can lead to inaccurate results and can affect your trading strategy. Make sure to use reputable sources for your historical data and double-check the accuracy before conducting your backtest.
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• Kumud TMar 30, 2021 · 5 years ago
  Another mistake to avoid is not considering transaction costs and slippage in your backtest. When you are backtesting a trading strategy, it's important to take into account the fees and costs associated with executing trades. Ignoring these costs can lead to unrealistic and misleading results. Make sure to include transaction costs and slippage in your backtest calculations to get a more accurate representation of your strategy's performance.
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• Meredith MangumJan 13, 2022 · 4 years ago
  At BYDFi, we've seen many traders make the mistake of overfitting their backtest results. Overfitting occurs when you optimize your strategy too much to fit historical data perfectly, but it fails to perform well in real-time trading. It's important to strike a balance between optimizing your strategy and ensuring its robustness. Avoid overfitting by using out-of-sample data to validate your strategy and by considering different market conditions.
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• tonydude21Sep 15, 2024 · a year ago
  One common mistake that traders make when performing a crypto backtest is not accounting for market liquidity. Liquidity can have a significant impact on the execution of your trades, especially when dealing with large orders. Failing to consider liquidity can lead to unrealistic results and can affect the feasibility of your trading strategy. Make sure to factor in market liquidity when conducting your backtest to get a more accurate assessment of your strategy's performance.
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• Oliver BeresfordJul 09, 2021 · 4 years ago
  When performing a crypto backtest, it's important to avoid the mistake of not considering the impact of market manipulation. Cryptocurrency markets are known for their volatility and susceptibility to manipulation. Failing to account for market manipulation can lead to inaccurate results and can affect the reliability of your backtest. Stay informed about market news and events that could potentially impact the price and trading volume of cryptocurrencies.
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• Seif roboticsNov 21, 2022 · 3 years ago
  One mistake to avoid when performing a crypto backtest is not taking into account the impact of slippage. Slippage refers to the difference between the expected price of a trade and the actual executed price. It can occur when there is low liquidity or high volatility in the market. Failing to consider slippage can lead to unrealistic results and can affect the profitability of your trading strategy. Make sure to factor in slippage when conducting your backtest to get a more accurate assessment of your strategy's performance.
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• Mccarthy SteenAug 24, 2025 · 2 months ago
  A common mistake to avoid when performing a crypto backtest is not properly accounting for risk management. It's important to consider the risk-reward ratio and the maximum drawdown of your trading strategy. Failing to manage risk properly can lead to significant losses and can affect the overall performance of your strategy. Make sure to implement risk management techniques, such as setting stop-loss orders and diversifying your portfolio, when conducting your backtest.
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• Stanislav GorokhSep 15, 2025 · 2 months ago
  Another mistake to avoid is not considering the impact of market trends and cycles in your backtest. Cryptocurrency markets are influenced by various trends and cycles, such as bull and bear markets. Failing to account for these trends can lead to inaccurate results and can affect the profitability of your trading strategy. Make sure to analyze historical market trends and incorporate them into your backtest to get a more accurate assessment of your strategy's performance.
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