How to backtest a trading strategy

• Written rules for entry, stop, target, trade management and filters (session, news, trend). If a rule needs judgement, write how you judge it.
• One market and one session to start, for example NQ in the New York morning or EURUSD in London.
• A test period long enough to include trending, ranging and volatile weeks, not only last month.
• Cost assumptions per trade: spread, commission and slippage. Use your real broker's numbers.
• A log with the same fields as your live journal, so backtest and live results can be compared.
• A replay tool that hides future bars, or the discipline to scroll one bar at a time.

1. Pick a start date and hide everything to its right (a bar-replay tool does this for you).
2. Step forward one bar at a time on your execution timeframe.
3. When the rules trigger, write the entry, stop and target BEFORE you step further.
4. Step until the stop, the target or your management rule closes the trade.
5. Log the result in R and in money, minus costs, with the setup tag.
6. Repeat until you have at least 100 trades, skipping no day you would have traded live.
7. Summarise: expectancy, maximum drawdown, longest losing streak, results by session and weekday.

At least 100 for a first verdict, and more before you compare sub-groups (sessions, setups). Small samples look convincing and are not: the table shows how wide the real range is around a 50% win rate.

• Look-ahead: seeing the next candles before deciding. Hide the future, every time.
• Cherry-picking: testing only the sessions or months you remember as good.
• Rule drift: quietly changing the rules halfway through because a trade "obviously" should not count.
• Ignoring costs: a strategy that makes 0.1R per trade before costs can lose money after them.
• Overfitting: adding a filter after every losing trade until the past looks perfect. Each tweak tested on the same data makes the result less trustworthy.
• Too few trades: see the table above.

Replay your backtest trades in order as if they were an evaluation. For every day, check whether the day's loss would have crossed the daily loss limit. Track the max-loss floor with the firm's drawdown type: static, end-of-day trailing or intraday trailing.

A strategy with a good average can still fail an evaluation if its worst week is deeper than the firm's maximum loss. Size from the drawdown first, then see whether the profit target is still reachable.

A backtest is a description of the past, not a forecast. After the backtest, forward-test the same written rules on a demo or simulated account for at least a few weeks. Compare the forward results to the backtest: if expectancy and drawdown are in the same range, move to live at a small size. If they are not, the backtest probably contained one of the biases above.

• Expectancy after costs: positive, and large enough that a slightly worse fill does not erase it.
• Maximum drawdown and the longest losing streak, compared with the account's maximum loss.
• Results by session, weekday and month: an edge that lives in one slot is a smaller strategy, not a bad one.
• A Monte Carlo reshuffle of trade order shows how deep drawdowns can get when the same trades come in a worse order.

For coded strategies, yes. Elave Backtest imports a TradingView Strategy Tester "List of trades" export and builds a report (seeded Monte Carlo, results by hour, weekday and month), saved in a library and kept apart from your live journal. It has no bar-by-bar replay. It is free with a signed-in account.

For bar-by-bar manual practice, use a replay tool; TradingView's Bar Replay, for example, simulates past price movement for strategy testing. Our comparison of backtesting software lists the main options, with each fact taken from the vendor's own page.

• Free backtest reportImport a TradingView Strategy Tester export.
• Backtesting software compared
• Prop firm challenge checklist
• Prop-firm risk management

• TradingView — What is Bar Replay? · checked 1 Nov 2026
• TradingView — Pine Script strategies · checked 1 Nov 2026

• How to keep a trading journal
• How to choose a day trading indicator
• How prop firm challenges work, and how they end
• Prop firm rules directory
• Prop firm and backtesting glossary
• Free Backtesting Tool for TradingView Strategies | Elave
• Trading guides, rules and tools

Elave (elavefx.com) is a free trading platform for retail and prop-firm traders: an auto-synced trading journal, Guardian rule checks on MetaTrader 5, an AI Coach that reads your own trades, a report for TradingView Strategy Tester backtests, a Telegram trading desk and application-only coaching (Elave Bootcamp). The platform is free with no subscription and no card; Elave is funded by partner-broker (introducing-broker) relationships.

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