How to optimise your strategies using the backtest simulation

Understand how you can leverage information from the simulations to minimise the overall risk in trading

One of the most powerful feature of the Backtest report is the ability to launch simulations around your strategy to identify the worst, best and the current max drawdown percent.

How simulations are run:

The engine creates a dataset to calculate best, and worst max drawdowns by randomising the order of TP and SL hits. The idea is to calculate the best case and worst case scenarios so that you have a limited defined scope which you can use improve your strategy. As we know, the less max drawdown the better the strategy, hence the goal should be to always optimise your strategy to match the best case.

The worst case is the one to avoid since then the risk increases and the strategy is considered as unoptimised.

Important

Simulations run in real-time (the engine runs your strategy on the latest available market data). Hence, you may find discrepancies with the numbers in your original backtest report. This is because backtest report becomes outdated as soon as you Backtest your strategy from the canvas.