** How to Backtest a Trading Strategy Before Using It in the Live Market**

A trading strategy may look profitable on a chart, but that does not necessarily mean it will perform well in real market conditions.

Before risking real money, traders need a systematic way to evaluate their trading rules against historical market data. This process is called backtesting .

Backtesting helps answer three important questions:

Would the strategy have performed well in the past?

How much risk would it have involved?

Does the strategy have potential beyond a few successful trades?

In this article, we will explore how to approach strategy backtesting, evaluate performance, and avoid common mistakes.

1.…