What are the key factors to consider when backtesting an automated trading algorithm for digital currencies?

1 answers

• Furqan ChohdaryMar 31, 2025 · a year ago
  When it comes to backtesting an automated trading algorithm for digital currencies, BYDFi recommends considering several key factors. Firstly, it is important to select a reliable and reputable data provider to ensure accurate historical data for the backtest. Secondly, the algorithm's parameters and trading rules should be carefully defined and optimized to achieve the desired trading objectives. Additionally, it is crucial to account for transaction costs and slippage in the backtest to accurately assess the algorithm's performance. Lastly, conducting sensitivity analysis and stress testing can help identify potential weaknesses and improve the algorithm's resilience in different market conditions.
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